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Year End Checklist for Service Based Businesses

If you’re like most businesses, your fiscal year ends on December 31. Make sure you’re not stuck at your desk frantically pulling files while everyone else is out celebrating the holidays— start early.

Just follow this list of to-dos, marking them off as you complete them. Then enjoy the end of the year with clients, friends and family.

Bookkeeping

It is important to make sure that your books are up to date. This not only makes tax preparation a breeze, but it also gives you important insight on the health of your business. Without accurate books you can't tell if you are making a profit, spending too much on overhead or have customers that owe you money.

Follow these 3 steps to get your books caught up

Make sure that all of your transactions are entered in your accounting system. Pro tip: if you connect your bank account to your accounting platform, this will be automatically done for you.
Make sure that transactions are allocated to the correct categories- this step will help you find tax deductions.
Reconcile your bank accounts- this step is important to make sure that transactions cleared the bank for the correct amount and to ensure that there aren't any duplicated entries or other errors.
Make End of Year Journal Entries- your bookkeeper will take care of this, if you DIY your bookkeeping you can research how to do this or hire a bookkeeper for a Year End Review of your books to make sure that they are accurate and adding adjusting journal entries.

If you haven't been keeping up with your bookkeeping and don't have the time to do it yourself, don't wait until the last minute. Your bookkeeper and tax preparer get very busy at this time of year and rushing can lead to unnecessary stress and increases the risk of costly mistakes.

Contact me if you need help getting your books caught up.

Taxes

The more disorganized your information is, the bigger the tax bill (not to mention, your tax preparer's) will be, now is the time to be proactive. If you did the bookkeeping steps above, you are halfway there.

Know when the dates for filing taxes are due. Noting the due dates for the year in advance will help you set a schedule. Mark them on your calendar and formulate a plan for making sure you are ready when they come around.
Make sure that you send W-2 to your employees and 1099 forms to your contractors by the deadline.
Complete bank reconciliations. This should have already been completed in the section above, if it hasn't yet, don't delay! This is important to ensure that the correct income will be reported and potential deductions recorded for when you need to know them.
Set up a meeting in December with your CPA or tax preparer. This will allow you to create a plan of attack and give you and your tax preparer a chance to discuss potential problem areas. Request a list of what they will need from you, any templates they’d like you to use and copies of last year’s working papers for reference. Ask for clarification on anything that’s unclear before things get busy.
If you plan to do your own taxes, research what items you will need and what software you will use.

Business Health

Take a moment to check the pulse of your business. The beginning of the year is usually the best time to make needed adjustments.

1- Review your business structure to ensure it’s still a good fit
Have you outgrown your sole proprietorship or other current legal structure? If you decide to make a change, the first of the year is the time to do it.

2- Revisit your business plan and adjust it accordingly
Update your privacy statement, add new sales targets, and create or update customer policies. This simple act focuses your thoughts and ensures that your goals align with your company's current state.

3- Review your marketing plan (or create one if you don't already have one)
Is your advertising paying off? It's fun to implement new advertising strategies but with all the other hats you wear, it’s easy to forget to look back at what worked, what should be stopped, and what should be kept and improved. Analyze your marketing channels and see if you are getting a return on investment. This includes print materials (brochures, business cards), social media presence, online advertising, sponsorships, print ads, etc.

4- Review your Website
Take a look at your website, does it look outdated? are parts not working? Is it mobile friendly? Have you done any SEO optimization?
If your website is made with WordPress, when is the last time that core, plugin and theme updates were installed? Do you have backups?

A secure and updated website is critical for your business' reputation and can impact your revenue. Make sure that all security patches available have been applied and that you have current backups. Plan any redesigns or repairs to ensure that your business' virtual presence is modern and professional.

Maintaining your business like you maintain your car

Your bookkeeper can ensure that your books are always up to date.

What does your business' accounting have to do with your car's maintenance? A lot.

Most people take their car for regular oil changes and tune-ups to keep it running smoothly and prevent a costly repair. On the other hand, many small business owners treat their bookkeeping like a major car repair, they wait for a problem (such as a tax deadline) to occur and then they reach out to a professional to fix it.

That is not the best approach to treat your business' books. Sure, your accountant is a skilled professional and well qualified to repair your books from months or years of neglect but they can help you better if you approach your business accounting like an oil change. Do it often, with a series of smaller and less expensive sessions. Monthly is a good frequency for many small businesses but some very new or very small businesses can get away with a quarterly bookkeeping update.

There are several benefits to this approach:

* It's cheaper- when you use a bookkeeper, you are not stuck paying your tax preparer/CPA up to 3 times the rate that a bookkeeper charges to clean up the mess

* It's fast- regular bookkeeping keeps your finances running smoothly, your bookkeeper can clean up small issues as they come up instead of letting them accumulate.

* It's informative- just like an oil change inspection can let you know if something in your car needs attention, like a brake replacement. Up to date books give you a current snapshot of the financial health of your company so you can make informed decisions about investment, clients that are past due, expenses that could be trimmed, and any other adjustments needed to the cash flow.

* Easy tax filing- your tax preparer can quickly complete your return (or do it faster yourself) when everything has already been allocated and organized throughout the year.

This all adds up to less stress, less hassle, and less cost, especially when you factor in extra deductions that your tax preparer can find for you when your books are clean and up to date.