Superman flies faster than a speeding bullet. And so does your first year of business.
One day you’ll be working away, dealing with a customer, perhaps, or sourcing supplies, and you’ll suddenly realize that you’ve been running your own small business a whole year!
That’s definitely something to celebrate. But it’s also something that you need to prepare for in advance because year-end demands a financial and tax accounting in preparation for your next year of business operations.
Follow these suggestions to be sure you do everything you need to do to close the books on your business year.
1) Use a proper accounting system from the get-go and keep your data entry up to date.
This is the number one thing you have to do to get ready for year-end. Whether you’re running a retail, service or manufacturing business, managing your business’s finances well is key to its success. But of course, no matter what accounting solution you’re using, an application such as QuickBooks or an accountant, you won’t have the data you need at year-end unless you have inputted or shared all the data necessary.
2) Know your tax responsibilities.
Do you have to or should you register for GST/HST?
How does having employees affect your tax situation?
Do you need an export/import account?
What are your annual filing responsibilities if your business is incorporated?
These are all questions you should already know the answers to if you’ve already opened your literal or figurative doors, as all of them have implications for what you have to do at year-end.
3) Organize that shoebox.
If you’re the kind of person who keeps their business receipts in a glove box, shoe box or drawer, do yourself or your accountant a favour and take the time to separate all your expense receipts into categories and tally each category. Having organized piles of receipts rather than a big jumbled cluster will make a huge difference at tax time.
4) Stay on top of customer accounts.
Slow payers and no payers are not just annoying; too many of them can make a real negative impact on your balance sheet at year-end. So fall is a great time to review customer accounts and take action such as reducing customer credit or calling in collection agencies to clear up your books in advance.
5) Evaluate your accounting practices.
The big question to consider is whether the accounting system you used during the year has done the job.
- Have you been able to input all the financial data you need to track?
- Have you gotten the financial information you need to make informed decisions and comply with all tax and government requirements?
If the answer to either of these questions is “No”, then it’s time to make some changes. Maybe you need to hire more staff to handle data entry, for instance. Or maybe you need a more robust accounting solution than you’re using now.
6) Set time aside to look back and plan forward.
Traditionally, year-end is the time to reflect on how the past year has gone and to plan for the future. It’s a time to pull out your business plan, your objectives and/or your action plans and engage in goal setting and action plans to set your future course . If you don’t wait until December 31st to do that you’ll be able to get started on your new plans immediately in the New Year – and make your next fiscal year even more profitable.