How to Prep Your Small Business Finances for the New Year

As a business owner, you know how quickly time flies. It probably seems like just yesterday you were getting ready for 2020. Believe it or not, it’s almost time to ring in another year.

January 1st is an exciting opportunity for a fresh start—including your finances.

As we close this chapter, it’s time to start prepping your business finances for the future. Read on to learn how to make next year the best (and most fiscally sound) one yet.

Review, Review, Review

The New Year is for new beginnings, but it’s also a time to reflect on the past. Take a thorough look at your finances to better understand exactly what you’ll be working with. Plus, it’s a great way to identify any mistakes (hey, they happen!) and devise ways to prevent future financial emergencies.

As you conduct your year-end review, pay attention to your:

Balance sheet
Profit and loss statement
Cash flow statement
Budget vs. actual analysis

Get Ready to Tackle Tax Season

We have some bad news: once the excitement of the New Year wears off, you’ll have just enough time to take a breather before tax season begins. Dealing with the IRS can be a real drag, but you can make it easier on yourself by preparing your business ahead of time.

As soon as you have your financial documents in order, get ready to file. If you have an accountant (which you probably should), consult with them as soon as possible. Remember, accountants are swamped during this time of year, so don’t wait until the last minute.

You Have Some Big Decisions to Make

Mom’s Christmas gift isn’t the only big decision you’ll have to make this holiday season. As the year rolls to a close, you’ll have these important financial considerations to look forward to:

Determining bonuses – Your team works hard, and giving well-deserved bonuses can show your employees how much you value their dedication. Take some time to determine who will be receiving holiday bonuses (and how much you plan to give them) so you can plan your budget accordingly.
Maximizing deductions – If your business was more profitable than you expected, that’s great news! However, this means you need to decide how you’re going to maximize your deductions to avoid excessive income taxes. We recommend working with an expert in small business wealth management to ensure you do this correctly.

Start Looking Forward

New Year’s resolutions aren’t just about trying a keto diet or introducing a new fitness regimen. Use this time to set financial goals for the year ahead. Whether you want to cut down on extra expenses, ramp up your marketing strategy, or invest in new equipment, having a well-thought-out plan will help you achieve your goals. Before you ring in the New Year, ask yourself:

Do I want to expand my business?
Am I planning on hiring more employees?
Is my current financial situation sustainable?
What are my long-term business goals?
Am I planning on making big changes in my personal life, like buying a house?

We know these questions can be daunting, but as they say: fail to plan, plan to fail. Tackle the big decisions head-on so you can look forward to the future with excitement rather than fear.

Time to Celebrate! Break Out the Champagne!

Having your finances in order when the New Year rolls around is another reason to celebrate. Once you have all your ducks in a row, you’ll be more than ready to celebrate a job well done. We won’t blame you if you’re ready to pop open a bottle of bubbly a little early this year!

Image Credits: istockphoto.com

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Nirupama Verma

Nirupama Verma is a self passionate blogger, managing a bunch of informational blogs. She has written a lot of informational content for several popular blogs.