What Every Business Needs to Do before the New Year

Review Profit and Loss Statements and Vendor and Lender Files

The first thing you should do before the end of the year is review the financial performance of your business. Get a sense of what the revenue is now that the year is almost over. Since you can reduce your tax burden by making a big purchase, determine whether it would make sense to do so and maximize your tax deductions by identifying eligible expenses. The depreciation can offset your tax bill.

Before you can begin filing taxes for the business, be sure the paperwork is complete. That means checking to make sure you have 1099s for all vendors and all information about outstanding loans. It is also important to identify and organize the different forms required for your business structure to ensure compliance when filing taxes. Check with your vendors to make sure their information is accurate. Double check that the information is correct in the accounting system, too. This makes it easier for the accountant to go over before taxes are filed.

Reduce Your Tax Burden

By the end of November, you should have already reviewed the P&L statements and 1099s. That way, tax preparation is much faster. There are perfectly legal things you can do to ease your tax burden if you are savvy about tax law and accounting, such as identifying and claiming eligible tax deductions to reduce your taxable income. First, review your annual expenses and determine if there is anything you need to pay, or can pay, by the end of the year. Business expenses, such as continuing education classes, association dues, or purchasing office supplies before year-end, also fall into this category and can help maximize your tax deductions. Paying expenses for employees can be a good benefit to offer them. It will also help them learn new skills all while giving the business a tax benefit.

Also, review tax changes for the year. Make sure that you have been compliant with the Affordable Care Act (ACA) and that you are aware of how the Protecting Americans from Tax Hikes (PATH) Act may implicate your organization’s tax situation.

Another way to reduce your tax burden is to pay your taxes early. If you have not estimated your tax burden for the year, you should do so by December. Meet with your accountant if necessary. Once you have estimated your probable tax bill for the year, go ahead and make a payment. If you decide to file early, it gives you more time to arrange payment before the deadline. If you expect refunds or credits, then you will receive them earlier.

Review Your Policies and Procedures and Make Changes

Most businesses have policies and procedures and manuals and guidelines. Unfortunately, those same businesses rarely follow up on their policies and procedures, meaning that changes in the law are rarely noted in the company’s official documents. In order to prevent your business from being caught off guard, spend time reviewing your policies with the goal of updating them to reflect legal issues and changes in the way you do business.

Do you have an employee handbook? If not, now is the time to make sure that all of your policies, procedures, and expectations are laid out in a single document. If you include information on benefits, disciplinary steps, performance reviews, compensation, and more, then it promotes fairness and transparency throughout the company. It is also far easier to train new employees and bring them on board. It is important to provide training to ensure all staff understand updated policies and procedures.

Review and Renew Insurance Policies

You must do an end-of-year insurance review to ensure your risk management policies are active and adequately cover your interests. Here are a few things to consider:

• Workers' Compensation – If you had a reduction in staff or hired more employees during the year, then ensure you are complying with your state's workers' compensation laws. Call your insurance agent to check on whether you are overpaying or underpaying based on your industry and number of employees.
• Leases – If the business leases office space, you most likely need general liability insurance in order to meet the requirements of the landlord. If you are considering a move in the new year, consider the insurance implications of the new space and how it changes the financial picture for your organization. Some landlords require higher coverage limits or certain liability coverage that you may need in addition to the general liability policy.
• Subcontractors – Do you use subcontractors? If so, be aware of whether damage caused by a subcontractor is covered by your general liability insurance. If subcontractor damage is not excluded from your policy, then your business may be liable for mistakes made by a subcontractor. Small businesses should consider requiring subcontractors to carry their own general liability insurance in order to mitigate this risk.
• Automobiles – If you or your employees use personal vehicles, determine whether the business needs to have commercial vehicle coverage in order to protect it from lawsuits.
• Changes – If your business is changing focus or expanding in the upcoming year, it is best to think about how the changes will impact risk management going forward.

Update Your Website

All businesses, no matter how big or small, need a great web presence to be competitive in any industry. However, if your attitude toward the website is "create it and forget it," you are missing important opportunities.

• Branding – If you have changed your branding, logos, address, colors, or even the font on anything you distribute, your website should follow suit. Consistency in branding is rewarded with a better first impression, more return customers, and increased loyalty.
• Mobile – Mobile optimization is no longer a nice-to-have; it is a baseline requirement. Google's mobile-first indexing means the search engine primarily crawls and evaluates your site based on its mobile version, not its desktop version. If your mobile experience is poor, your rankings will reflect that regardless of how polished your desktop site looks. 

Leverage Big Data

In today’s environment, learning to use big data is essential. It can help you understand sales numbers, determine what areas to keep investing in and which ones to let go, and even help you find better employees. Artificial intelligence is increasingly important for small businesses, as it can automate repetitive tasks and provide data-driven insights that drive efficiency and growth. Here are some tips:

• Website Analytics – Every business should review data about who visits the organization’s website and how they interact with information provided. Thankfully, Google Analytics makes this easier than ever before. But what metrics should the business focus on? The most important metric is conversion rate. Knowing your conversion rate gives you information into how engaging your web presence is, and helps you determine if your calls to action are effective. If conversion rates are lagging, you may need to redesign the website to make it more user-friendly and engaging.

• Customer Feedback – Using data helps you understand your website, but it can also be used in unique ways. For example, big data is being used to optimize several areas central to the business, such as customer service, operations, and management. Data can help you analyze what your customers want, even if you only use simple survey software to solicit feedback. The end of the year is the perfect time to collect feedback. Once you have got the data, you can use it to make sure there is nothing you have overlooked. When optimizing business operations, consider selecting technology solutions—such as CRM software, e-commerce platforms, or cloud collaboration tools—tailored to your specific business needs to maximize efficiency and results.

Update Your Business Plan

Your business plan should be a living document that is useful to the company throughout its lifetime. But in order for it to be useful, it has to be continually updated.

For existing companies that are closing out the year, here is a checklist of steps to take when revising the business plan:

• Review the Original Plan – Have you updated your original business plan? If not, then reading it now will be a tremendous learning experience. If you update the business plan, it gives you an opportunity to actually record what your experiences have been since the business opened. This can lead to valuable insights that will make the business stronger.

• Evaluate Your Business's Performance – Assess your business's performance over the past year by analyzing key metrics and results. This reflection will help you set realistic and measurable business goals for the upcoming year, ensuring your objectives are aligned with your overall strategy and growth plans.

• Review Sales – Review the business’s annual sales and determine whether some products and services sold more than you thought they would, or whether some sold less than you expected. Did sales meet your projections or fall short? What about peaks and valleys throughout the year? Analyzing your sales information this way helps identify what you are doing well and where you need to go back to the drawing board. You may even find there is an opportunity to pivot. Once you see where you have been, it is easier to draw up a plan for where you are headed.

Set Milestones

A business plan is a comprehensive guide wherein answers to the questions and problems you will face in each stage of growth are laid out in detail.

Businesses must be able to have a future vision without ignoring complications of the present. In order to create a plan that accounts for the present, short term, and long term, it is important to set realistic and achievable milestones for your company. Each milestone is a future goal, such as “increasing revenue by 10% by the second quarter.” To ensure that these goals are accompanied by real-world considerations, the milestones must include action items, such as “email 100 business owners; divide owners into hot leads; schedule in-person presentations.” The action plan is a way of incorporating incremental steps to achieving your goals.

Setting clear milestones not only helps track progress but also enables your team to stay motivated and focused on achieving your business objectives.

Review Recordkeeping Requirements

State and federal governments have recordkeeping requirements for businesses. Whether you are a corporation, limited liability company, or sole proprietor, you should review a recordkeeping checklist before January 1. This is the best way to determine whether you had any obligations that may have slipped through the cracks during the year.

In addition, it is important to review your collections process to ensure timely payments and maintain accurate records of accounts receivable.

Corporations have heightened recordkeeping requirements. A corporation is an entity that exists separately from its shareholders. That means there are additional formalities and recordkeeping responsibilities, such as adopting legally binding corporate resolutions.

Assess Your Team

December is the best time to review your team and determine whether any changes should be made. All performance reviews will have been completed and your final revenue and goals should also be set.

Managing people is the most important but overlooked factor in business. Having engaged, productive, and happy employees is good for the bottom line. Your Human Resources department is on the front lines. Make a point of having a meeting or retreat with your team where you can hear their ideas and feedback about employee relations. With their input, you can decide if you need to tweak employment agreements, employee handbooks, and confidentiality and non-compete agreements.

Decide if there are people who would work better in another job, and whether there are those who should be promoted. By the same token, there are always a few people who are not a good fit for the organization. Your New Year's resolution should be to make personnel changes that will enable the business to thrive. Fortunately, many people search for new jobs in January. Work with Human Resources to identify the top talent.

Budget

Once you have all the information in the preceding steps, begin meetings about next year’s budget. Remember that budgets are not real; they are estimates and goals. As such, focus on making them actionable. Each financial line item on both revenue and expense levels should also include a few follow-up action items. How will you achieve the revenue goals you set? Be sure to plan and allocate resources for marketing campaigns in the upcoming year, evaluating current campaign results and setting measurable objectives for improved performance. The questions you ask here will really help you zero-in on how to identify growth opportunities.

When discussing revenue and cash flow, review outstanding accounts receivable to track money customers owe and ensure timely collection from money customers. This will help you manage cash flow more effectively and avoid issues with unpaid invoices.

While the process of making the budget is meaningful, do not forget that this cannot become a dead document that goes back into the file cabinet when budgeting is over. Review and update it throughout the year. Once you have done that for a full 12-month cycle, you will have even more data to use in future planning.

Customer Service and Experience

Year-end is the perfect time to reflect on your customer service and overall customer experience. Start by gathering feedback from your customers through surveys, reviews, or direct outreach. Analyze support tickets and customer interactions to spot trends or recurring issues that may have impacted satisfaction over the past year. Use this information to identify areas where your service can be improved, whether it is faster response times, better communication, or more personalized support. Planning new initiatives or training for your team can help ensure your business continues to deliver exceptional service, which is key to building loyalty, increasing future income, and helping your business thrive in the year ahead.

Backup and Data Management

Before the new year begins, it is essential to safeguard your business’s valuable information. Take time to back up all financial records, customer data, and important business documents. Review your data management policies to ensure you are storing information securely and in compliance with any industry regulations. Update or remove outdated information from your systems to keep your records accurate and organized. Leveraging accounting software and automation tools can help streamline these processes, reduce the risk of data loss, and free up your time for more strategic tasks. A solid backup and data management plan not only protects your business but also supports efficient operations as you move into the upcoming year.

Year-End Challenges and Tips

The end of the year can be a hectic time for small business owners, with the pressure of closing out financial reports, preparing for tax season, and planning for the future. Common challenges include organizing necessary documents, managing cash flow, and ensuring all business taxes are filed correctly. To overcome these hurdles, consider automating repetitive tasks like payroll processing and invoicing, which can save you over an hour each week. Delegate responsibilities where possible and use accounting software to keep your financial records up to date. Staying organized and proactive will help you tackle year-end challenges with confidence, improve your overall efficiency, and set your business up for a smooth start in the new year.

Inspiration and Motivation

As you wrap up the year, take a moment to celebrate your achievements and reflect on how far your business has come. Remember, taking care of business is not just about crunching numbers—it is about passion, perseverance, and moving your business forward. Channel the energy of classics like “Takin’ Care of Business” and let it inspire you to set ambitious goals for the year ahead. Whether you are a small business owner delivering pizzas or leading a plugged-in stage band, staying motivated and focused will help you overcome obstacles and keep your business thriving. Embrace the new year as a clean slate, shout your goals from the rooftops, and get ready to take care of business like never before.

Conclusion

By aiming to update your processes, policies, and plans, you can evaluate your past, present, and future. Be sure to include decision-makers, key personnel, and trusted outside sources when you make your analysis. Always make a point of thanking your customers, contractors, and employees so that you keep positive relationships and motivate your team for the new year. As the days of the year wind down, chart a course for success by reviewing how the business performed and making a realistic plan for progress. Happy planning!

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