Year-End Financials: 10 Essential Tasks To Do by New Year’s

As the year comes to a close, there are plenty of things to get done: make sure you have sidewalk salt, plan and attend your holiday celebrations, spend time with family, and either avoid or embrace the Minnesota winter, depending on your preferences. With so much to do, your year-end financial essentials may not be top of mind. We’ve rounded up a list of top 10 essential financial tasks to complete by the end of the year, so you can worry less about your financial to-dos and more about your personal ones. For a more detailed explanation of each topic, hear our President, Amanda, speak on a BWC Vizcast about these tasks.

Prepare for Next Year with These Year-End Financial Tasks

The theme of end-of-year finance preparation is catching up and getting ahead. Whether you feel confident in your financial systems or you know they could use improvement, year-end is an opportunity for you to review your financial statements, get a sense of what you have left to do, prepare for the new year, and set up or refine your systems to work better for you in the long term. If the idea of “end-of-year finances” is stressful to you, have no fear. KeyLin Advisors is here to walk you through every step of the way with our top 10 year-end financial tasks to do.

1. Organize Financials

Make sure all your financial odds and ends are up to date and in one place. Collect your receipts and update your accounting software or records to accurately reflect not only your income this year, but also your expenses. Depending on your records and expenses, this could include reconciling your bank accounts and reviewing your credit card statements to make sure everything you need to track is accounted for. This will not only help you with tax preparation, but it will also ensure your books are accurate going into the new year, so you can make the best financial decisions possible for your business.

2. Set Up a Retirement Plan

Have you been saving for retirement through your business this year? If you have, feel free to jump to the next task. If not, it may not be too late. Most business retirement accounts just need to be set up before year-end, while the contributions are typically due around the tax deadline. This is another chance to set yourself up for success in the future by laying the groundwork for future contributions — and your eventual retirement.

3. Make Charitable Contributions

In order to be deductible, charitable contributions have to be made by December 31; the exact amount you can deduct this way varies, but don’t let that deter you if you’re feeling particularly generous. Many nonprofit organizations and other charities run end-of-year campaigns, so you should have ample opportunities to find ways and places to donate that align with your personal values.

4. Pay Bills

Everyone wants to start fresh in the new year. As you come to the end of one year, what better time to get ahead of your bills? Paying all your bills — old or current — will help you start with a clean slate and more accurately plan your year-end financials, which will also give you and your bookkeeper a better sense of where your business stands so you can make more informed decisions for how to operate moving forward.

5. Buy and Count Inventory

If you run an inventory-based business — or generally have other inventory, like Client gifts or freebies for events — now is the time to make sure all your inventory counts are accurate. First, count your existing inventory so you know, exactly, what you have, then place orders and buy new inventory for next year based on those numbers. You can start your year with a full inventory, and maintain the counts, so everything stays in order and aligned throughout the year.

6. Buy Necessary Equipment

If you have any equipment that is necessary for your business to run smoothly, consider purchasing it at the end of the year. This can even include a vehicle, if you need and drive one for your business. Making these types of purchases at the end of the year is beneficial, because you’ll have a better sense of where your year-end financials are and what you can afford; take advantage of having extra money where you can, rather than waiting until an emergency situation that could negatively impact your business. In addition, some equipment can be deducted from your taxes, so purchasing this equipment can be a strategic business decision.

7. Double Check Earnings and Expenses

Make sure your earnings and expenses are recorded and coded properly in your accounting records or software. In general, year-end is a great time to account for personal items that can be deductible for your business, like your cell phone, home internet, and mileage. Depending on how you use these things for your business — and if they are both ordinary and necessary — they can be deducted, at least partially. For more information on expenses and deductibles, check out our introductory article here.

8. Review Loans

Take some time to review any business loans you may have. Does the current balance match what’s on your financial statements? Did you account for interest on your loans? The interest is deductible. Like with previous tips, the goal here is to get a sense of what you owe, so you can plan more effectively around it, both in your income projections and business activities, and in planning your payments toward the loan. Being aware of your loans and debts is just as important as being aware of your income and expenses.

9. Pay Out Year-End Bonuses to Staff

If your cash-flow allows and you’re looking for ways to reduce your taxable income, providing your staff with year-end bonuses can be a win-win for everyone. Your team will feel appreciated and celebrated, the bonuses will help with regular or end-of-year expenses, and you can adjust your taxable income to what you’d like it to be.

10. Talk to Your Accountant

This last tip is perhaps the most all-encompassing, but talk to your accountant about your year-end financials and what you have left to do. They can provide you with more information on a variety of financial options and elections you can make, such as whether an S-Corp classification is appropriate, how much you can contribute to a business retirement plan, and what you can do to reduce your taxable income. They can also help you make sure you’re still on track to meet your business and financial goals by checking on things like quarterly estimates, payroll withholdings, and more. If your financial records are already up-to-date (or getting there), they may also be able to estimate your tax liability for the upcoming tax season.

Prepare for Next Year with an Accounting Partner

While you can do any of these steps alone, an accounting partner can help guide and support you as you go, so your questions can be answered, your finances can be sorted out, and you can feel more confident going into next year. KeyLin Advisors offers virtual accounting and bookkeeping services so you can collaborate with a trusted partner on your financial needs across your business. Thinking about your year-end financials? Schedule your free first consultation with us today to start next year on the right foot.

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