You’ve almost made it to the end of the year. Yay You!
As an entrepreneur, that’s a big WIN.
You might want to skip ahead to the fireworks and bubbly, but there a few things you should deal with first.
I know year-end stuff isn’t as fun, but spending a little bit of time now will save you some time and let you rock the new year without loose ends.
Year End Financial Checklists for Entrepreneurs
Whether you work with a bookkeeper, accountant or are a DIY type of business owner, ignoring your financials can be costly.
Start the new year with a clean financial slate.
We’ve put together a list of a few key questions that you should be able to answer to set yourself up for financial success in the coming year.
Are your financial records up-to-date?
Okay, being a team of one can be tough.
You need to keep yourself organized and it’s easy for accounting tasks to get pushed to the bottom of the priority list.
The only thing worse than the mess you may have how is starting a new year with last year’s mess.
Here are a few items to check off your list:
Check your accounts
Whether you do your own books or not, have a look at your accounts and make sure things add up. Mistakes happen, but the sooner you catch them the less they can wreak havoc on your accounting.
Maximize your RRSPs
Who doesn’t want to pay fewer taxes? Take advantage of the refundable tax credit to reduce your taxes owing and increase your tax refund.
Ensure that all of your business expenses are recorded
No, those receipts aren’t going to take care of themselves.
Make every effort to collect any outstanding invoices
Mo money for you, yes please. Although the holiday season can be a busy time for people personally, business usually slows down a little which means it’s a good time to deal with loose ends like unpaid invoices.
This little bit of financial housekeeping will help you start the new year without the stress of unresolved accounting tasks looming in the shadows.
Are you ready for tax season?
If you've done everything above then you’ll already be in pretty good shape for tax season.
Mecklai has a great list of documents sole proprietors should have ready for tax time:
An electronic copy of your bookkeeping records for the year, and any passwords required to access the information
Financial Statements for the year including balance sheet, income statement, and cash flow statement
Payroll Records (if you have employees)
Asset additions or disposals during the year (land, equipment, vehicles, etc.)
Business Use-of-Home Details (If running a home-based business)
Motor Vehicle Expense Information (Percentage use for business, mileage log, etc.)
Income Tax Installment Assessments and Notices of Assessments
Most years at tax time people are scrambling to get their stuff together and swear they aren’t going to let it happen again next year.
The only way it won’t happen is if you take care of it now.
Where are you wasting money on your business? Are you profitable?
I saw a quote somewhere about how many entrepreneurs treat their businesses like a trip to Vegas. They spend first and ask questions later.
Your business won’t survive if it isn’t profitable.
Mike Michalowicz wrote a great book called Profit First. It’s all about transforming your business from a “Cash-eating Monster To A Money-making Machine.”
Take some time to look at the numbers (since you’ve done all that accounting stuff, right?!). Be really honest about what services you’re paying for and whether they are essential.
Look at the upcoming expenses for the year including things like technology, support staff or virtual assistants, and conferences.
I know nobody likes the B-word, but you should have a budget for your business. This blog post from FreshBooks, walks through how to create one.
It may not be a ton of fun, but it’s more fun than stressing about your business’s finances.
I hope you were chucking old receipts or documents you were done with as you dealt with the financial stuff above.
We're supposed to be moving towards a paperless society, but we definitely aren’t there yet.
If left unattended, your stacks of papers can become unruly.
Doing a year-end sort and purge is a good way to keep things manageable and organized.
As you go through the copious amount of paper, separate items into four piles:
Anything that has sensitive information should be shredded rather than thrown out.
Businesses contribute a lot of paper to landfills. According to Rubicon, “the United States throws out the amount of office paper it would take to build a 12-foot wall from Los Angeles to New York City (2,794 miles). Help keep paper out of the garbage and toss it into a blue bin instead.
Paper takes up a lot of space. Scanning documents can cut down on a lot of paper clutter.
For your electronic files and scans, use an external hard drive or cloud-based solutions like Dropbox. They keep files you don’t need anytime soon filed away so that you don’t bog down your computer.
If you’re a stationary lover than you could reward yourself with a nice new something from Stylus.
Do you have new revenue goals for next year?
It’s great to say you want to bring in an extra $100,000 in revenue next year, but how are you going to do it.
Last time I checked, there wasn’t a revenue fairy godmother.
Won’t that be nice?!
Revenue is often tapped as one of the main reasons entrepreneurs fail.
Set yourself up for success by really digging into how you’re going to make your revenue goals into a money reality.
The more detailed you can get with these goals the better.
Consider these questions:
How many sales will it take?
How many prospects do you need to talk with to get a sale?
How many people do you need to call, email, etc. to get the opportunity to sell your product or services?
How are you going to find the people you’re going to sell your amazing offer to?
Before all the new year craziness starts, map it out.
Just taking the time to plan it can make you twice as likely to achieve your goals.
Take a Breath
A year is a long time and before we jump into a new one, take a breath.
We know that running a business can be crazy, rewarding and exhausting, plus often all at the same time.
Take a moment to reflect on all you’ve accomplished in the last year.
We hope that the new year is filled with great opportunities and rewards for your business.
PS: If you haven't had the chance to check out our coworking spaces in Edmonton and Sherwood Park, Dylan & I would love to show you around and answer your questions about coworking. Book a tour now.