What You Need to Get Prepared For
While most of us are getting excited for the holidays, it doesn’t mean that the year is done quite yet! With 2019 coming to a close, what do we think of when we hear “year-end”? Taxes! But that’s not all.
Year-end is the perfect time to start your business planning for the new year. You’re already dealing with the books so why not do some analysis and make sure your business prospers over the coming year? I want to walk you through a small year-end checklist that will help you get off to a good start.
The first thing is to get your books in order. Some might find this challenging while for others, it’s a piece of cake. But whether you’re one of those who stuff a glovebox full of receipts or are a small businessperson who can afford a bookkeeper, you have to get this step done before you can do anything else.
Then the next step on the list is to figure out the current state of your business. You’ll want to look at your balance sheet, income statement and cash flow statement.
Your balance sheet will show you a summary of how your business is doing financially at a particular point in time. It shows all your assets, liabilities, and equity.
Then your income statement shows whether or not your business is profitable at a particular point in time by itemizing your revenue and expenses, resulting in a profit or loss.
Lastly, the cash flow statement shows your starting cash and your closing cash for a particular period of time, showing you where the money has gone.
Once you’ve examined your balance sheet, income statement and cash flow statement, dig a little deeper by checking your business’s current ratio, total debt ratio, and profit margin. It won’t take long when you have your balance sheet in front of you.
Now that you know where your business is, it’s time to reflect.
Did your business accomplish what you set out to do for the year? Why or why not? Make to take some notes. These will be handy when you do your business planning for the upcoming year.
Part of this includes evaluating your current tax strategies. Talk to a professional such as an accountant and/or tax lawyer to get advice about which tax strategies would be best for your personal and business circumstances.
You can turn over the required documents to an accountant or if your savvy enough, prepare your income tax yourself. Just make sure you have access to your financials!
And then that’s It! You’re Done!
Have you heard the saying: businesses that fail to plan, plan to fail? Well, it’s true! We all know how important business planning is, but it’s easy to put off.
Don’t put this off! If you want to be successful and continue to grow your business, planning is a necessity. The more you plan, the more you’ll be ready for every scenario, good or bad.
I hope all of you have a fantastic New Year and start off on the right foot!
Original publish date: December 02, 2019