Prepare Your Business for the New Year With This Year-End Checklist

It goes without saying that year-end is typically a crazy time for business owners. Between the holidays and trying to get everything wrapped up before the year comes to a close, it can be overwhelming and (let’s be honest) a little stressful. To help take the stress out of the season and gear up for the new year, let's review what to include on your year-end checklist for you business.

Year-end checklist for a business: Check off these 7 items

Plan your holiday marketing strategy? Check. Figure out your business’s holiday schedule? Check. Get started on your year-end closing checklist? Almost check. Before you head out for the year, don’t forget to cross these year-end tasks off your to-do list.

1. Prepare financial documents

As a business owner, you know how oh-so-important your financial documents are. They give you a snapshot of your finances and can tell you a lot about your business, like which expenses you need to cut back on.

To see where your finances stand at year-end, prepare and review your financial statements for the year as soon as you can. Not sure where to start? No worries. Let me break down which financial statements you should prepare at year-end:

Income statement: Summarizes your revenue and expenses and the money you’ve gained and lost throughout the year. Your income statement can show you if you need to cut back on certain expenses and help you make important financial decisions.
Cash flow statement: Lists your business’s incoming and outgoing cash. Seeing your cash flow for the year can help you predict future cash flow and create a forecast.
Balance sheet: Shows your assets, liabilities, and equities, and tracks financial progress. Review this at year-end to ensure your liabilities and equity are equal to your assets.

Preparing these documents at year-end can help you see your income and expenses for the year, how much cash is flowing into your business, and if your books balance. Once you assess your documents, you can strategize a financial game plan for the new year.

2. Have tax forms on hand

Sure, tax season is still a couple months away. But, it never hurts to prepare as much ahead of time as possible. To help wrap up things for year-end and prepare for the upcoming year and tax season, make sure you have employee and contractor forms in your records.

Check your records to make sure you have Form W-4 on hand for each of your employees. If you use independent contractors for certain projects or tasks, make sure you have a Form W-9 on file for each contractor.

Come tax season, use Forms W-4 to fill out Forms W-2 and W-3, and Forms W-9 to fill out Forms 1099-NEC.

If you really want to be an overachiever and prep for tax season, get copies of all the forms you need ahead of time (now is perfect!) so they’re ready to go in the new year (e.g., Forms W-2, 1099, 940, etc.). And, consider making a list of all the forms you need to file and their deadlines so you don’t miss a beat. Trust me, your future self will thank you later.

3. Review and analyze your goals for the year

Remember those goals you set for your business at the end of last year/beginning of this year? Well, it’s time to review and analyze them to see if you missed, reached, or surpassed them (hopefully it’s one of the last two).

Take a look at the goals you set for this year and see where you stand. To organize your goals better and visualize your successes, consider keeping them in a document or spreadsheet.

If you didn’t reach a goal, evaluate why you missed the mark. Then, use your findings to make improvements and set more reachable goals for the new year. If you reached or surpassed your goals, analyze what you did right and set SMART goals that are more challenging, yet reachable, for the upcoming year.

4. Update employee and payroll information

Your year-end responsibilities aren’t limited to just financial and accounting tasks. You also have to make sure your payroll is in order and accurate before the start of a new year. Otherwise, you could wind up with incorrect tax forms and disgruntled employees.

Before the end of the year, make sure your payroll records are up-to-date and accurate in your books. Do an audit of your employees and their payroll information to ensure everything is in shipshape and matches your books. Look at things like:

Employee information
Wages
Deductions
Withheld taxes
Employer payroll taxes
Benefits
Raises
Bonuses
Tax rates

5. Check your inventory

If your business stores inventory, do a physical inventory check before year-end to find out how much of each product you have on hand. Compare it to your business balance sheet (hint: year-end checklist for a business item #1) to see if they match up. If they don’t, find the discrepancy and make adjustments if needed.

Checking your inventory will not only help you plan how much stock to have on hand at the beginning of the year, but also will tell you how much inventory you sold throughout the year and its value. Compare this year’s inventory totals to the last to see if your sales have improved over time. Use your inventory levels to forecast how much inventory you’ll need each month next year, too.

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6. Get your books in order

The last thing you want to do before taking that well-deserved vacation at year-end is to leave your books out of sorts (a.k.a., potentially unbalanced and chock-full of accounting mistakes). To get your accounting books organized, balanced, and accurate, you can:

Ensure your accounts payable and receivable are all up-to-date
Organize your business receipts
Reconcile bank accounts and credit card statements
Track down past-due invoices

The more you do to ensure your books are balanced and ready to go for the new year, the better. And then, schedule an appointment with your accountant to be sure you've crossed your t’s and dotted your i's with your books.

7. Create your budget

Last but certainly not least, take a look at your budget from the year to create a new budget for the upcoming year.

Unless you know a place where money grows on trees, you can’t spend money all willy-nilly during the year. You have to set and follow a budget to stay on track for financial success. To help craft your budget for the upcoming year, review your current budget to dig into what went right and what went wrong. Ask yourself a few questions, such as:

Where can I spend less?
What adjustments need to be made?
Can I afford to spend more?

After you establish your new budget, use it to help establish financial goals for the upcoming year. And like with anything on your checklist, the sooner you finalize your budget for the new year, the better.

Start your new year on the right foot

Happy year-end, my fellow business owners! Cross those items off your year-end checklist for your business, pat yourself on the back, and get ready for another great year.