The end of the year often feels like a whirlwind for small business owners—closing sales, preparing for the holidays, and making plans. But as the calendar turns over, taking the time to tidy up your finances and prepare for the new year is essential for setting your business up for success.
A little financial housekeeping now can save you time, money, and stress down the line. Here’s a checklist of 10 critical accounting tasks every small business should complete before the new year.
1. Review and Update Financial Statements
Your financial statements—income statement, balance sheet, and cash flow statement—provide a comprehensive snapshot of your business's financial health. They’re essential not just for understanding where your business stands, but also for tax filing and setting future goals.
Start by ensuring all financial transactions for the year are recorded and properly categorized. Double-check for any errors or discrepancies, such as missing receipts, duplicated entries, or incorrect expense classifications. Accurate, up-to-date financial statements are the foundation for everything else on this list.
Pro Tip: If data entry feels overwhelming, consider automating your bookkeeping processes with software like QuickBooks or Xero.
2. Analyze Cash Flow and Make Necessary Adjustments
Cash flow is the lifeblood of any small business. Even profitable businesses can run into trouble if they run out of cash to cover day-to-day expenses.
Take a close look at your cash flow statement. Does anything stand out? Identify months where cash was unusually tight and note what caused it. Were there seasonal dips in revenue or unexpected expenses? Could you benefit from improving invoicing practices to get paid faster?
Consider creating a detailed forecast for the next 12 months, accounting for predictable expenses and revenue trends. This prep work can help ensure you’re never caught off guard by cash shortages.
3. Assess Tax Liabilities and Plan for Tax Season
No one enjoys tax season, but planning for it now can make it far less stressful. Review all taxable income, deductions, and credits to determine your estimated tax liability for the year.
Think ahead to upcoming deadlines, such as submitting Form 1099s for contractors, which are due in January (in the U.S.). If you think you may owe taxes, consider making an early payment to reduce potential fines or penalties.
Consider scheduling a meeting with a tax professional now. They can help you identify any end-of-year tax-saving opportunities, such as writing off major expenses or carrying losses forward.
SEO Tip: Look up “Tax Planning for Businesses” for the latest tips and changes in tax law.
4. Set Financial Goals for the New Year
It’s tough to know where you’re going if you don’t have a clear destination. Use your financial data to set realistic, measurable goals for the new year.
For example, you might aim to:
Increase revenue by a specific percentage.
Maintain a certain profit margin.
Pay off a specific amount of debt.
Save toward a significant investment, such as new equipment or office space.
Breaking these large goals into quarterly or monthly milestones can make them feel more manageable and help you stay on track throughout the year.
5. Evaluate Your Accounting Software
Is your current accounting system working for you, or are you constantly battling spreadsheets and clunky processes? The new year is the perfect time to assess whether your accounting software meets your needs.
If you’ve been handling accounting manually, upgrading to a software solution like FreshBooks, Wave, or QuickBooks can save significant time and reduce errors. Already using software? Check for updates or integrations that could streamline your processes further.
If your business is growing, you may need to upgrade to a platform that can handle more complex needs, such as multi-state payroll or inventory management.
6. Conduct Inventory Checks and Manage Stock Levels
If your business involves physical inventory, a year-end stock count is a must. Not only does this help you ensure accurate financial records, but it also identifies issues like overstocking or shrinkage.
Compare your actual stock levels to what’s recorded in your books and address any discrepancies. Use this data to fine-tune your purchasing strategy for the new year. For example, discounting slow-moving items can free up cash flow and warehouse space.
Additionally, proper inventory management can impact your taxes. Unsold inventory may need to be deducted as a business expense, so accurate counts are critical.
7. Evaluate Outstanding Invoices and Collect Overdue Payments
Cash tied up in unpaid invoices could be holding your business back. Before the year ends, review all outstanding invoices and follow up with clients who haven’t paid.
If you struggle with collecting payments, consider implementing tools like automated email reminders or offering multiple payment methods (e.g., credit card, ACH transfers, PayPal).
For long-overdue accounts, it might be time to decide whether to escalate to a collections agency or write the invoice off as bad debt (if allowable by your local tax laws).
8. Plan for Major Expenses or Investments
Thinking about buying new equipment, hiring additional staff, or expanding your space? Large expenses often take careful planning to avoid disrupting cash flow or overextending your budget.
Create a plan that outlines your anticipated investments and explores potential funding sources, such as small business loans or grants. Knowing what major expenses are on the horizon can also help you calculate how much you need to save each month.
Remember to prioritize investments that will deliver the highest return, whether that’s improving productivity, cutting costs, or generating new revenue streams.
9. Ensure Compliance with New Regulations
Tax codes and accounting regulations can change frequently, often catching businesses off guard. Make sure you’re up-to-date on any changes that could impact your business.
For example, this might include:
New federal or state tax laws.
Changes to payroll regulations.
Updates to how businesses calculate depreciation.
If you’re unsure about compliance issues, consult your accountant or business advisor. Staying ahead of regulatory changes can help you avoid costly penalties in the new year.
10. Seek Advice from Professionals
Navigating the financial intricacies of running a small business can feel daunting. That’s why it’s always a good idea to enlist the help of professionals—whether it’s an accountant, bookkeeper, or financial planner.
Professionals can provide valuable insights into your financial position, help you maximize tax-saving opportunities, and create tailored strategies for growth. Even a one-time consultation can pay off significantly.
Pro Tip: Many small business owners find it helpful to bring in a professional to conduct an end-of-year financial audit. Fresh eyes can often spot inefficiencies or opportunities you might have missed.
Build a Better Financial Future in 2025
The new year represents a clean slate—an opportunity to refine your processes, set new goals, and take control of your small business’s financial health. By tackling this year-end accounting checklist, you’ll start the new year with clarity and confidence.
Looking for more ways to simplify your finances? The Brilliant Solutions Group is here to help! Contact our team for expert advice and tools that will make managing your business finances easier than ever.
Don’t wait—set your 2025 financial plan in motion today!
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