The end of the year can often be hectic as you try to bring in last-minute sales and take steps to reduce your tax liability before it is too late. All businesses need to wrap up by the end of the year, but this process can be calm and simple if you follow these four simple ways to wrap up your business this year.
1. Take Inventory
It is important to take inventory to take stock of how many business assets you currently have. Taking inventory helps you determine how much capital is tied to your products. For goods-based businesses, you may have inventory in multiple categories, such as finished products, products used to make new items or work-in-process items.
Even if your business does not sell goods, you still need to take inventory to account for your assets. You need to keep track of computers, office furniture and other office equipment. Taking inventory can also help you evaluate if you need to replace some of these assets and if it is best to invest before the end of the year so that you can factor in these purchases with your taxes.
2. Complete End-of-Year Accounting Tasks
You want to be able to give your accountant an accurate picture of your financial situation, so it is important to complete end-of-year accounting tasks, such as:
· Reconciling your accounts - Reconcile all bank and credit card statements. Do the same for loans, lines of credit and payroll liability.
· Review fixed assets - Review your financials and ensure that assets are accurately identified. Fixed assets are usually worth $1,000 or more and expected to last for more than one year.
· Verify employee information - Soon tax forms will be going out, so it is important that you have up-to-date information for all of your employees. Have employees review their last W-4 form and make any corrections to their name, address, tax id or other information.
· Identify all 1099 vendors - Review the payments that you have made to vendors and independent contractors. You must provide a 1099 form to those you have paid $600 or more to that are not corporations. Ensure you have a W-9 for all such individuals.
· Check accounts payable and receivable accounts - Run an aging report to determine which accounts are still open. Try to get final payment before the end of the year and pay off vendors whom you owe.
3. Thank Your Employees
The end of the year is a great time to show appreciation for your employees and to recognize all that they have done throughout the year. Don't worry about having to pay huge employee bonuses if you can't afford it. Studies indicate that praise from management was the most motivating factor for performance for most workers.
Take time to write cards that express your gratitude and recognition for a job well done or verbally recognize staff during a meeting. You can also provide small gifts that are personalized to their interests, a day off or an award.
4. Reflect on the Year
The end of the year is the perfect time to reflect on your business. Consider what goals you had for the year and whether you accomplished them. If you did not, identify the challenges that prevented you from accomplishing them and how you can refine your goals for next year. Consider important achievements you made this year and what you learned. Focus on two to five goals that you want to accomplish for the next year. Put this information in writing so that you can revisit it next year and keep yourself on track.
Now that you have thought about end-of-year tasks, you can focus on making sure you have enough capital to pursue the opportunities of the next year. Usher in the new year with confidence in your leadership and your business.