It’s officially the end of the year! As this year draws to a close, there are some key money moves you can make to finish the year strong and set yourself for success in the year ahead.
If you’ve never taken the time to close out your finances for the year, I challenge you to make this the year you start! As we get closer to the new year, there’s no better time to wrap up the old and move forward with the new!
Check out 7 ways to close out your finances for the year and get ready for even more success!
7 Ways to Close Out Your Business Finances for the Year
1. Make A Budget and Review Your Profit & Loss Statement
As a small business owner, you should be creating a monthly budget and keeping track of your expenses. If you’re not already doing this, make it a goal to start one in the new year.
Take a look at your profit and loss statement and ask yourself a few questions:
- What were my revenues? My expenses?
- What categories did I overspend? Underspend?
- Did I hit my sales goal for the year?
- Where can I cut expenses?
- Where/How can I increase revenue?
- What would I like to repeat next year? What do I want to do away with?
- I’m most proud of _____
The key is to identify any areas that need improvement, see what worked, didn’t work, and where to focus your time next year.
If you are feeling intimidated by putting together a budget, grab my Creative’s Pricing Guide! This guide will walk you through determining your personal budget, business expenses, and help you determine pricing for your services.
2. Reconcile Your Books
Just like you need to reconcile (i.e. balance) your checkbook, you also need to reconcile your bank transactions within your business. Essentially, the transactions entered on your profit and loss statement need to match what is in your bank account!
Whether you utilize a software like Quickbooks or just a regular old Excel file to track your numbers throughout the year, take the time to make sure each of the transactions match up.
If you don’t reconcile your accounts throughout the year, this job could take you some time to do!
3. Send Payment Reminders To Overdue Accounts
Do you have any outstanding balances? Now is the time to send out those reminders in order to get those bills paid (and a little extra $$ in your pocket)! Simply, send out a reminder email with a link to their invoice for an easy payment option. It doesn’t hurt to give your clients a gentle nudge, especially since they may have gotten swept up in all the holiday craziness!
5. Send out 1099’s
As a photographer, I often have quite a few different second photographers work with me throughout the wedding season. According to IRS rules, any contractor paid over $600 should be sent a 1099.
In order to send out that 1099, you’ll need to receive a completed W-9 from each contractor. The amount paid to each contractor can be written off on your taxes, and the 1099 basically acts as a receipt.
Are you utilizing Quickbooks for your bookkeeping? Quickbooks has a feature where you can request a W-9 from each contractor, and it’ll send out a 1099 for you in just a few simple steps!
4. How Much Did You Pay Yourself?
Take the time to review your bank records and calculate how much you paid yourself throughout the year. It’s important to see how much you actually took as payment and determine if that was enough of a salary.
When reviewing your salary, ask yourself these questions:
- Did my salary increase or decrease compared to last year?
- Did I contribute enough to my household budget? Do I need to increase my salary next year?
5. Reach Out To Your CPA
In addition to scheduling your tax appointment, reach out to your CPA to see if there is anything you can do to lessen your tax burden before December 31st. They may have a few ideas for you! They can also give you a rough estimate of how much you may have to pay in taxes (as long as you have your Quickbooks up to date!).
Be sure to ask your CPA these 5 questions at your meeting as well!
6. Review Your Financial Goals
Review your financial goals from the previous year. What goals did you set? Did you accomplish them? Why or why not?
If you didn’t hit a specific goal, get clear on why you didn’t hit that goal. What do you need to do differently next year? Does this goal still apply to next year? Do you want it to be one of your primary focuses?
Start a fresh list of financial goals and decide what you want to accomplish next year. I love utilizing the Cultivate What Matters goal planner throughout the year. It helps me to flush out all of my ideas, stay on track, and keeps my goals front in center at all times.
7. Complete One More Money Move
Before the year is over, make one final money move to help you start the year off right. What is one more thing you can do to end the year on a high note? Below are a few ideas for you:
- Read a personal finance book, article or blog (I love Profit First or The Total Money Makeover!)
- Write down your money goals. What do you want to accomplish next year?
- Pay off debt
- Get rid of your credit cards
- Make a transfer to savings
- Open an IRA or a new savings account
- Start investing into a ROTH IRA
Closing out your finances for the current year puts you in a great financial position for the new year! You’ll feel ready to take on upcoming year refreshed, rejuvenated and ready to tackle those sales goals! Cheers to the new year!