When the end of the year rolls around, the small business owner is likely to end up swamped with extra duties to prepare for closing out the books. That is true unless the savvy entrepreneur prepares in advance for what he or she knows must be completed in a timely manner. For example, the bookkeeping must be caught up before tax returns can be prepared.
It is wise to get the revenues, expenses, assets and liabilities recorded so the business owner knows exactly where the business stands financially. This is the only way to know if changes need to be made, like raising prices, lowering expenses, paying off debt earlier, and so on. It is unfortunate that so many small businesses operate in financial darkness much of the time because their bookkeeping is always behind.
Following are some additional things to-do when the end of the year is getting close:
• Do tax-planning – The time to do tax planning is well before the end of the business year. There are many opportunities to reduce a potential tax liability. For example, if a large profit is expected, the business owner can purchase new equipment before the end of the old year, rather than in the new year. Perhaps it is time to pay employee bonuses or write-off uncollectible receivables. Spend some time with the accountant to discuss taxes, and make sure the estimated tax payments are made in a timely manner to avoid penalties.
• Review social Media Pages – The information on the internet concerning the business does matter because most people now rely on websites and social media accounts. Keeping content up-to-date sometimes seems to fall in the same category as filing or bookkeeping – the “I’ll do it later” category. Review all internet sites the business maintains, and make sure the content is up-to-date, fresh, and client-friendly. It may be time to completely redo the website to increase sales. If this seems like an overwhelming job, hire a professional to help.
• Review the Business Structure – Many small businesses begin as sole proprietorships. When the business gets to the point where personal liability is simply too large, or there are tax advantages to changing the legal structures, it may be time to convert the business to a corporation or LLC. The best time to do so is at the start of a new business year.
• Reread the business plan – Read the business plan in light of the end-of-the-year status of the business. Is the business still adhering to its mission? Do the goals and strategies still make sense given market conditions? Is the business achieving sustainability? Do the financial projections need revision? A business plan is not fixed in time forever. It needs regular revision in order to stay relevant.
• Review the Market and Competition – Most small business owners are kept incredibly busy doing everything from selling to bookkeeping. It is easy to lose sight of the status of the marketplace and the competition. Before the end of the business year, it is smart to step back and try to take an unbiased view of how the business fits in the industry, and the local market if operating a storefront. In some cases, the market analysis indicates new trends the business can capitalize on or new competition that is just entering the market. It may be time to enter new markets or expand a presence in the current one. Being proactive is much better than being reactive.
• Set Goals for the New Year – It is important to set business goals every year, using the mission statement and the business plan as the foundation. Goal setting is a bit of an art form. Goals should be big enough to inspire success and small enough to be manageable. Goals are achieved with specific, measurable, action orients, realistic, and time-specific (S.M.A.R.T) objectives.
Of course, there are some other housekeeping type duties to take care of at the end of the year. For example, be sure to inform customers or clients of the business holiday schedule, spruce up the store during slow periods, provide feedback to employees on the past year’s results and future plans, and review required documentation like licenses to ensure nothing has slipped through the cracks in terms of due dates. Start a new business year with a fresh business plan and clean financial records, and get ready for another successful twelve months.
Illustrative business plan samples
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