Hello SOTGC community,
Preparing for year end does not need to be a daunting task. With just a few simple steps in place you can have all the important documents organized and ready for your accountant to file your taxes. Having your financial documents in order for your accountant ahead of time will help avoid problems later. You will have plenty of time to carefully review the information and make any necessary changes. Your accountant should work with you one on one and let you know what exact documents they will need from you.
Here is a short list of a few important documents you should review and have prepared at year end:
1. Income Records – These are bank deposits, statements, receipt books, invoices, and credit card processing data for the past year. Organize by date and make notes of any issues that occurred during that month.
2. W-9s and Employee Withholding – If you hired an independent contractors or subcontractors, you will need a W-9 Form from each one. You will also need to send a 1099-MISC to each one. If you have employees, organize the taxes and social security you withheld. If you use a payroll service, they will have this data.
3. Receipts for General (Home Office) Business Expenses – You will need receipts as backup documentation for any expenses related to your business that you plan to deduct or “writ off”.
4. Assets – To support any depreciation for assets, you will need the purchase records (invoices, statements or canceled checks) that include information about when, what amount and what purpose an item was purchased. If you no longer own assets you previously claimed, make note of how much you sold the item for or how you disposed of it.
It’s important for business owners to think smart and remember that as one year comes to a close a new year is beginning. Successful businesses strategically plan for success, and the start of a new physical year is the best time to do develop a plan. There are three key things that business owners must develop a winning strategy for the incoming year. Look to the past to know what you need to change, look at the present to know what you need to be sustained and look to future to know how you will grow.
1. Take Financial Stock of 2013 – What worked this year? What did not and why? Analyze revenue. Where did the money come from? From there, decide what to offer/expand in 2013. Let go of programs, products, and services that fall into that 10 percent or less of revenue. Analyze costs. Where can you improve your business to make it more efficient and reduce expenses?
- What projects brought in more than 10% of revenue?
- What expenses were on the high end of your business budget?
- Is there processes that can be outsourced?
2. Create a Budget for 2014 – A good budget does not just tell you how much money you can spend, it will tell you what you will be able to spend moving forward. To create a budget that works you need to establish your break-even point, contribution, and cost. Creating growth and financial value is not only knowing where your business is going, but also knowing what it will cost you to get there.
- What areas of your business do you want to expand?
- What areas of your business do you want to decrease?
- How much will a new project(s) effect your bottom line?
3. Target New Revenue – What new products and services can you create? How can you improve your customer and business relationships? Cost is very important when putting together a new business strategy. Many business owners fail to look into revenue options thinking it will increase expenses. When an expense helps improve your efficiencies, or builds future revenue, it is in fact enhancing the value of your business. These expenses should actually be viewed as assets your business can leverage to create a return.
- What new services could you offer to current or new customers?
- What B2B strategies could you develop (partnerships, workshops, seminars etc.) ?
- Is your business ready to expand to a second location of untapped revenue?
Whatever stage your business is at it will take planning and preparation to go to the next level. The ultimate goal is to retain as much of your revenue as possible. Smart business owners are able to use their current financial data to determine what future moves they will make. Start with a solid financial foundation and you will always have an excellent source to base your decisions. If you establish and follow good business practices throughout the year, you are guaranteed to not only have a successful year-end but a successful transition to the new year.