small business meeting, preparing for year-end
small business meeting, preparing for year-end

10 essential steps to prepare your business for year-end

As the year draws to a close, businesses need to gear up for the year-end financial flurry and ensure a smooth transition into the new year. We all know that January 1, 2024, will be here before we know it, so we have put a year-end prep list together to help your business out.

Here are 10 steps for preparing your business for year-end: 

1. Don’t forget to prepare your 1099s and W-9s

With increased fines and IRS scrutiny, filing 1099s demands your attention ASAP. To avoid penalties, ensure that contractors and non-incorporated entities you’ve paid over $600 receive their Form 1099 by January 31, 2024.

You’ll also need to gather W-9 forms from contractors or freelancers you collaborated with for services during the year. Promptly collecting W-9s significantly streamlines your year-end accounting, avoiding rushed efforts and costly errors. It also demonstrates professionalism and fosters good relationships with contractors. Once received, ensure the information is promptly updated in your accounting records.

Ask us about our 1099 preparation services. 

You may also be interested in: A guide to Form W-8BEN for U.S. employers with international contractors

2. Conduct a tax projection and evaluation

When it comes to taxes, proactivity pays off. Scheduling a tax projection meeting with your CPA is a strategic move. In this meeting, you can review the previous year’s financials to project taxable income and lay the groundwork for identifying tax-saving opportunities in the upcoming year. Collaborate with your CPA to explore potential deductions, considering options such as equipment upgrades, energy credits, or charitable contributions to optimize your tax situation.

3. Evaluate expenses 

Take the time to sit down and review your expenses for the year. Many businesses have daily, monthly, or yearly expenses that could be trimmed or eliminated entirely. There may be better uses for that money. Take a look at recurring charges on your accounts—one of the most common areas for savings is in reducing or eliminating under-used subscription services.

You may also be interested in: How to cut expenses: Guide for small businesses

4. Ensure you have a complete picture of your taxable income

Despite monitoring their profit and loss (P&L) reports, many business owners find some surprises at year-end. For example, you need to note that although personal expenses from the business account and shareholder distributions don’t appear on the P&L, they still impact your financial picture by withdrawing money from the business bank account. 

4. Clean up and reconcile your business books

If you haven’t locked down your books throughout the year, it’s crucial to do so now. Take the time to go over key documents like income statements, balance sheets, accounts payable reports, accounts receivable reports, and cash flow statements. Tidying up your records ensures better readiness for tax season and avoids hefty fees for data cleanup:

  • Check uncleared checks
  • Resolve any discrepancies
  • Confirm all outstanding debts are settled
  • Self-employed individuals should ensure that estimated taxes are paid
  • Double-check that all payroll taxes and/or sales taxes are submitted, if applicable 

5. Reimburse business expenses

Record and reimburse yourself for any business expenses that you’ve covered personally throughout the year to ensure that your personal finances stay separate from your business and allow for accurate tax deductions. Don’t forget about mileage for any vehicle used for business purposes.

6. Notify payroll companies for S-Corps 

Shareholders in S-corporations holding 2% or more of the company must report certain benefits, like health insurance, on their W-2 forms. If your payroll company manages these filings, it’s vital to communicate the accurate numbers to ensure that the W-2 forms reflect these benefits correctly.

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7. Set a business budget

Before ringing in the new year, it’s essential to set a business budget. While staying flexible, a budget ensures funds for crucial savings and timely debt payments. Evaluate the budget’s performance at year-end, adjusting for additional expenses, income changes, and upcoming needs to maintain financial health.

To create an accurate budget, analyze your financial statements—review revenue and expenses. Your cloud-based accounting system’s dashboard simplifies this with easy access to monthly and yearly reports.

Remember to regularly reassess budgets, especially during growth or unexpected expenses (and remember that most business expenses can qualify as tax deductions).

8. Stay ahead with banking relationships and lending options

Small business owners may want to schedule a discussion with their banker to assess their business’s current financial standing, review growth strategies for the year, and explore available lending options such as lines of credit, updated credit cards, or potential loans.

Given the Small Business Administration’s (SBA) efforts to increase accessibility and streamline lending programs for small business owners, these loans could be worth exploring for businesses planning real estate or equipment purchases.

9. Update your tech stack

The end of the year is a prime time to explore opportunities for improvement. Business owners should explore leveraging technology to boost productivity. Consider automating tasks where possible—it’s an investment that can significantly enhance your business and reclaim precious time.

For instance, if your business is still stuck in Excel, cloud-based accounting apps streamline repetitive chores like expense reporting, payroll taxes, and data entry. Embracing these apps provides real-time insights into your business, accessible from anywhere. Make it a resolution to streamline and save time and money by integrating cloud-based accounting solutions into your back-office operations in the new year.  

10. Schedule your year-end strategic planning session

As we approach the year-end hustle, consider tackling the items on this list before 2024 arrives. Taking these proactive measures streamlines year-end processes and positions your business for success in the upcoming year.

We also recommended scheduling a strategic planning session with your advisor to finalize tax projections, review long-term financial plans, and ensure your business is primed for success in the new year.
Reach out to our team with any questions.

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