Get Ready for New Years
December already?!?!?!? Didn’t it seem like the year just started? If you haven’t given your financial statements a glance since last tax season, now is the time to start getting ready for putting 2016 to bed and start planning for 2017 (aka your best year yet!). Here are some of the top challenges I’ve guided small businesses & entrepreneurs through this time of year.
Gather all your financial data in one place
Now is the time to check through all your receipts and various statements to make sure you have everything together and accounted for. If they are shoved in a drawer, shoebox, etc. take the time to pull them out and put them in some sort of order. Organizing these files monthly and using accounting software helps avoid tedious, time-consuming tasks at year-end. You want to be able to take advantage of ALL business expenses! If you don’t already have a system in place, now is also a good time to take advantage of year-end promotional offers on software, such as QuickBooks Online.
Prepare for 1099 Reporting
Did you pay a vendor more than $600 this year? If you neglected to get a W9 before working with them, make sure you request the information now! Print out a W-9 or direct them here so they can get it to you. If you prepare your own 1099’s be sure to review all of your payments by vendor and confirm the amounts with your vendor to avoid amending the forms later on. Send them by January 31st to your vendors! The IRS doesn’t need them until the end of February.
Check in with your tax professional
How did you do this year…better or worse than you estimated? Make sure to review your quarterly tax payments and compare them to your original estimated payments. Avoid large unexpected payments or potential penalties and interest! If you are gearing up for a large tax bill come April, are there any large purchases you’ve been avoiding? It’s always fun to say to a client “Yes, go ahead and buy that new truck and retire the old one that keeps breaking down!”
Unusual or Non-Recurring Transactions
Make sure to report any of these transactions to your accountant so they can be categorized appropriately on your taxes. General rule of thumb is large purchases over $1000 can be classified as assets and be depreciated over a couple of years to get the most tax benefit. It’s good practice to set these transactions aside when looking at your normal business activity so you don’t include them in your operating budget.
Planning for 2017
Speaking of budgets now is the best time to really look at how your business performed this year and set a new budget in place for next year. Were you pricing accurately to cover all your normal expenses? Clients are more open to increases at the beginning of the year. Are you paying for a subscription you are no longer using? Cut those excess expenses. Make sure you have your plan in place now and monitor it monthly so you can make changes throughout the year. It’s better to be proactive than reactive!
Thinking of “year-end” as a year-round series of planning activities can alleviate the pressure you feel at the end of the year. Having an organizational process in place reduces the amount of time you spend on your end-of-year audit and tax preparation and allows you to focus on your other daily activities.
about the author
Jen Turner has assisted organizations ranging from small to large lay the groundwork for building their business with solid financial and operational systems. If you are drowning in your shoeboxes or in need of strategic planning for the New Year, contact her today!