The end of the year is pressure-packed for business owners as they balance the crush of the holidays with responsibilities to customers. Although it seems tough to find the hours, it is essential to spend some time reflecting on the year that is ending, wrapping up any loose ends, and preparing a game plan for the next year. Many businesses fail to regularly update or refresh their policies, procedures, website, and business plan. This makes a company less efficient and more likely to be caught off guard by changes in the industry, shifts in consumer preferences, or the rise of new competitors.
Here are 11 things all businesses should do before the end of the year that will keep the business fit and profitable:
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. The depreciation can offset your tax bill.
Before you can file 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. 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.
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. 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 or association dues, also fall into this category. 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.
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.
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:
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.
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. Here are some tips:
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:
John J. McAdam, Managing Partner of WG90, told Wharton Magazine that during his business planning workshop for companies that were already operating, half of the participants wrote business plans that were entirely focused on the future. The other half wrote exclusively about what the business was doing now. McAdam said the imbalance showed a fundamental misunderstanding about what business plans could do for a company.
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, McAdam recommends setting milestones. 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.
In your first business plan, you should have analyzed your proposed target market and performed a competitive analysis. Now that you have been in business for at least a year, updating these numbers will be illuminating.
This is where you can discuss barriers to entry in more detail, provide additional real-world information about your competitors, and discuss your efforts to improve market share. Starting the year with a new market analysis will give you positive forward momentum.
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.
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.
Making legally binding decisions in a corporation requires corporate resolutions. Corporate resolutions are formal declarations of major decisions made by the corporation. The resolutions are filed with the official corporate records.
Meeting minutes should also be kept and updated throughout the year. The meeting minutes are official records of what happened during the company's meetings. These can help you keep your plans on track as well as settle any disputes about what happened during meetings.
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.
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? The questions you ask here will really help you zero-in on how to identify growth opportunities.
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.
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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