Was this year Naughty or Nice?
There’s still time to change before the year ends.
As this year comes to a close, the holiday season is well underway. Thoughts of friends and family and feelings of gratitude and joy fill the air. Most people are winding down for the few remaining weeks of the year. Kids are home from school, many people are traveling, and others are simply relishing the time for a bit of R&R.
But, if you’re like many small business owners, you have an endless list of responsibilities that come with an equally infinite number of decisions you must make before year-end. Whether it’s end-of-year cash flow, payroll, employee bonuses or collecting all your outstanding receivables, time is of the essence.
Before December is over, you must understand your financial position.
Profit and Loss
Or, Now may be the time to make that big purchase!
Take a good look at your profit and loss statement. If your profits seem higher this year than in previous years, some pro tips may help you reduce your taxable income.
- Defer billing. You may consider billing late in December (and not collecting right away) or delaying the delivery of some products until after the new year begins.
- Maximize expenses. You might want to pay some future costs in advance. If you plan to attend a conference early in the year, see if you can use early registration to put that expense in this year’s books.
- Go shopping. Now may be the best time to buy the equipment you’ve been eyeing. If you purchase equipment for your company and place it in service before the end of the year, you could be entitled to a tax deduction for the asset.
Accounts Receivable and Invoices
Or, It’s time to go with the (cash) flow!
Do you anticipate any last-minute expenses to hit your books? Can you cover year-end bonuses and payroll? If you’re going to struggle to meet obligations, the sooner you know, the better prepared you can be to prevent cash flow disruptions.
- Call your customers. If you have any outstanding invoices, now is the time to push for collections and settle any late customer payments.
- Secure cash. If collections are not really an option, or your cash flow is impacted by longer net terms, you may try an alternative source of cash like accounts receivable financing or a line of credit.
- Slow down your payables. If you simply need a quick fix, use a credit card to pay suppliers. Just make sure you pay off your balance quickly in 2019.
Reconciliation and Review
Or, Now is the time to get your house in order.
It’s important to make sure that your year-end financial statements match up to source documents in order to ensure the information is accurate and valid. Compare transactions you have recorded against monthly statements from your bank, credit card company, or other financial institution to ensure that your records agree with each other.
- Validate data entry. Missing transactions and transactions that were incorrectly recorded can wreak havoc on your year-end business filings.
- Identify discrepancies. Unexplained inconsistencies may be signs of theft, or they may be a sign of a bank error. Either way, it’s critical you find this out as soon as possible.
- Make projections. Reconciliations help you spot runaway spending so you can make adjustments to improve your company’s financial health and assist in your financial planning.
Your financial statements and analytics will provide a better understanding of your current financial structure, your previous year’s finances, and a potential budget for 2019. Year end is a great time to reevaluate your current bookkeeping processes and systems.
Cloud-based bookkeeping solutions help streamline and automate your processes, ultimately saving you time and money. With apps and software that make automation easier than ever, may the New Year be your best year yet.