14 December 2022
The end of the year is a time for festivity and celebration. However, this time of year means much more for business owners: year-end planning.
1. Ensure that all accounts are reconciled:
Before you deal with any other year-end issues, you must ensure that all your bookkeeping records and accounts (bank accounts, accounts receivable, and accounts payable) are up-to-date and balanced. This should be kept up to date and regularly reviewed throughout the year to know the state of your business and catch any problems before they snowball because you know your business best.
Next, examine the accounts thoroughly to ensure everything appears in order.
Next, consider any unpaid receivables and any payables you still owe. Finally, check that you agree with everything that has been accounted for, recorded, purchased, and paid for.
2. Examine Financial Reports:
Now that you’re confident your books are clean and the data is correct, you can dig into your year-end financial and management reports. When you take the time to review your finances carefully, you can make decisions based on facts that will help your business succeed. These fundamental reports include your income statement (profit and loss statement), balance sheet, and cash flow statement.
In addition to key financial reports, your accounting department should also give you performance statistics. This will help you get a clear picture of how profitable your business is and help you make informed decisions for the following year.
3. Evaluate the Cash Flow Statements:
Examine the cash flow statements from the previous year. When evaluating these statements, you should look for problems (like a lack of cash flow) and figure out why they happened. It would be best if you also looked for clear patterns to help you predict your cash flow and make plans for the coming year.
For example, did your company have a seasonal cash flow problem because of low demand, issues with the supply chain, or something else that could happen again? If this is the case, I’d like you to make plans to prepare for these challenges, so they do not become a problem.
4. Tax Planning and Strategy for the End of the Year:
Take a look at your company’s income and expenses at the end of the year, with a focus on taxes. Speak with your accounting team or CPA about making last-minute moves to reduce your taxable income and improve your company’s tax position before the year ends, and your financials are locked in. Consider splitting income or taking advantage of maximum depreciation claims, for example. You can save money by making necessary purchases during the fiscal year rather than waiting until after January. Consider delaying invoices and not billing customers until after the end of the fiscal year if you can afford to wait on some of your receivables.
5. Review Last Year’s Goals and Reflect on Your Business:
Set aside time to reflect on your finances, review your goals from the previous year, and compare how your year went in comparison to your budget and actual numbers. Discussion with your Advisor will allow you to delve deeper and plan more effectively.
Consider the following:
How did you manage to stay on track?
In what ways did you succeed?
Where and why did you stray?
To realize your professional goals, you need to ask yourself many more questions than the ones listed above. With the proper training, you could find your focus and pivot to success.
If you’d like to discuss this more, please schedule a strategy call with me, so we can talk about ways to increase your wealth and how to scale your business.