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5 Financial Steps For Business Owners To Take Before Year End

5 Financial Steps For Business Owners To Take Before Year End


Published in: End Of The Year

When your business is in full swing, it's easy to push off financial maintenance until the end of the year. But don't wait until December to get your financial house in order. Whether it's prepping for tax season or gearing up for the new year, the fall is a great time to check in with the financial aspects of your business.

Not sure what to focus on? These 5 steps are the most important to get knocked out before year-end.

1. Review Your Budget to Actual

If you're not on track to make your budgeted goals, now's the time to fix it. Review your year-to-date results and compare them to your budget. If your forecast for the rest of the year doesn't get you to where you need to be, make some adjustments to either reduce expenses, increase revenues, or both!

Even small changes can make a big difference. It could be as simple as bringing on one more client or cutting out a few smaller monthly expenses. But the longer you wait to make these adjustments, the harder it is to get back on track. That's why it's important to focus on these changes in the early fall when you still have a few months to make a difference.

2. Ensure Your Accounting Records Are Updated

It's a good idea to keep your accounting records updated on a regular basis, but if you've been putting them off, the fall's a good time to check back in and make sure everything looks good. When you're diving into your numbers, you generally want to look for the following things:

  • All transactions are entered and for the correct amounts
  • Transactions have been categorized correctly
  • Payments for outstanding invoices have been received
  • Due and overdue bills are paid
  • Payroll and sales taxes are being collected and paid accurately and on time

Set aside at least a few hours of undisturbed time to focus on reviewing your records and making adjustments as needed. And for the future, set a recurring appointment on your calendar to check in (we recommend every few weeks at a minimum) so that you're never too far behind.

3. Prepare For Year-End Payroll Reporting

If you pay employees or independent contractors, you'll likely have some forms to file come year-end. Both Form 1099 (for independent contractors) and Form W-2 (for employees) have set filing deadlines and require certain information about the recipient. If you haven't previously collected this information (such as their full name, mailing address and social security number), now's the time. Track down this information before year-end so that you're not scrambling around for it right before the filing deadline.

You may also want to research options for filing the required forms. If you have a CPA who handles your other tax obligations, this may be a service that they offer. There are also online tools, such as or, that will file these forms electronically for you. Or, your accounting software, such as QuickBooks, or your payment processor, such as Square, may also provide filing services.

4. Check-In On Your Quarterly Tax Payments

Quarterly estimated tax payments are generally due April 15, June 15, September 15 and January 15. Typically you are required to make estimated tax payments if you expect to owe at least $1,000 in tax for the current year and you expect amounts withheld for taxes to be less than the smaller of 90% of your current year’s tax or 100% of your prior year’s tax. 

Even if you've been on top of making estimated tax payments every quarter, the fall's a good time to ensure you've paid in what you need to. Do a quick calculation of your taxable income year-to-date, and then project what your total taxable income will be for the entire year. Calculate your estimated total tax liability on that number, and compare that to what you've paid in so far. This will give you a good idea of what you'll need to pay in the last quarter of the year. If you're short on cash, now's the time to make a plan to set aside what you need so that you'll be able to pay your full tax liability when you file during tax season.

If you haven’t made any estimated tax payments, don’t fret. While you may incur a small penalty, there are also some safe harbor rules under which you may not incur a penalty if your tax liability is under a certain amount or you pay a majority of what you owe by a certain point. The rules vary, but the IRS offers helpful resources on their website, which can be found here.

5. Prepare For Year-End Tax Deductions

Speaking of taxes, now's a good time to review your tax deductions and ensure you're maximizing your expenses to reduce your overall tax liability. If you've got some extra cash lying around, consider the following strategies for increasing tax deductions before year end:

  • Invest the money back into your business on expenses that are deductible
  • Pay bills this year that are due right around year-end, so that you don’t have to wait an entire year to take the deduction
  • Consider pre-paying expenses, such as insurance, rent and memberships
  • Make tax-deductible retirement contributions to your or your employees’ retirement plans
  • Write off bad debts, such as outstanding invoices from customers who have stopped paying
  • Write down obsolete, damaged or worthless equipment and inventory

Before taking any of these deductions, it’s a good idea to speak with your tax advisor to ensure this is the right strategy for your situation.

To finish out the year in good shape and avoid stress and chaos come tax season and the new year, set aside some time this fall to check in with the money in your business. These 5 steps will help you get organized, be in compliance and hopefully save money.

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