3 Business Must Haves for the End of the Year

Every solid business has the financial pieces necessary to running a business.  These include income, expenses, and financial planning. For a business to have the right financial preparedness you need to have three things done before the end of every year.  Otherwise, you pull your hair out and be worried about the IRS. You need to make sure all your books are up to date, you’ll need to generate a Profit and Loss Statement (or P&L for short), and you need to either pay your end of year tax payments, or prepare to pay your end of year taxes.

It’s easy to get caught up in the daily operations, or traditional holidays this time of year, so taking time to plan these must haves out will save you a lot of stress. Rushing into the bookkeeper’s office without a plan can end up costing you 2-3x as much in follow-up meetings. Plan ahead with the right resources and guidance. Here are a few tips to keep you ahead of the game.

1. Updated Bookkeeping

• Start early by having regular monthly bookkeeping so that you don’t stress about how little time you have at the end of the year. Put a file management system into place to file all your income and expenses into an easy to access place for your bookkeeper.
• Call ahead, and schedule a time to give your income/expense file to your bookkeeper so that he or she will be able to put your business as a top priority and not a rush job.
• Not all businesses need to wait till the last day of the year to turn in needed files.
• Employee Information/Subcontractor Information. Make sure all your employee/subcontractor contact information is up to date in November/December. By doing so you can hand over the needed information to get ahead on payroll W2/1099 tax information so there is less of a time crunch in January.

2. Profit and Loss Statements

• Now that you have your paperwork prepared, and your books have been updated you can now start working on your own taxes. Most bookkeepers will give you a P&L statement after the bookkeeping is up to date. If you have someone prepare your taxes hand them or email them a copy of your P&L statement, or if you prepare your own taxes, using the P&L statement can reduce the time needed to prepare your own taxes.
• Schedule time in early January to sit down with your CPA or your computer to get the fun process finished. Isn’t it amazing how busy we are and how important scheduling time is? Pick the day your business is the slowest and schedule nothing for that day so you don’t feel overwhelmed in case questions come up.
• Important Note: Your Profit and Loss statement can help you at the beginning of the year if you need extra resources from a bank or investor and even for planning purposes.

3. End of Year Taxes (Including Payroll/1099)

• Most times, “end of year” taxes are done in January, but did you know you can pay sooner than that? Some businesses that aren’t bringing in income before the last week or so can estimate their taxes and pay ahead of time. The best way to do so is using a bookkeeping service and plan ahead. Any extra time you can save in December means less worry in January.
• Remember, if you have employees or use subcontractors you have a deadline in January to make sure their tax information (W-2 or 1099) has been sent to the IRS as well as to the employee/subcontractor.
• For more information on how to file your own taxes with your P&L please visit the IRS website or consult with a licensed tax professional (we will be happy to refer you to some great CPA’s we know).

Summary

Take time to schedule and have these three things in order. Making sure you have a follow up plan/communication plan with your bookkeeper ready so that the crazy busy season doesn’t leave you scrambling for the right paperwork at the last minute. For more information on what your specific business needs to do to prepare for the end of the year please contact one of our team members. Avoid the rush and enjoy your business more.