Your business income is generally reported on a calendar-year basis unless you are incorporated and you choose a different fiscal year. The last quarter of the year is when you must focus on a variety of important year-end tasks to reflect on the past year, learn from it, and ensure that you are prepared for the next year.

1. Updating Your Financial Records

Before addressing other year-end matters, you must ensure that your accounting information and balances (bank balances, trade receivables, and payables) are accurate and reconciled. Some of the steps you should take are;

• Create and send invoices for goods delivered or services performed
• Send invoice reminders
• Record expenses
• Separate personal and businesses expenses
• Update vehicle mileage log
• Pay overdue supplier invoices
• Reconcile your bank accounts
• Update your fixed assets
• Pay any overdue Sales or payroll taxes
• Verify employee information
• Count your inventory

This must be maintained up-to-date and examined regularly throughout the year so that you are constantly aware of your company’s status and can identify problems before they escalate. Do not forget to update Fixed Assets accounts along with the fixed asset register.

Verify the accounts thoroughly to ensure that everything is in order. Consider any delinquent payables and receivables that it indicates you still owe. Verify that everything that has been accounted for, recorded, purchased, and paid for has been done so according to your specifications.

2. Examine and Review Your Financial Statements

You may now confidently analyze your end-of-year financial and management reports, knowing that the books are in order and the data is accurate. To make data-driven decisions for the success of your firm, you must assess your finances thoroughly. These vital reports include your income statement (profit and loss statement), balance sheet, and cash flow statement. In addition to basic financial data, your finance department must offer you the management reports you need to make prudent business decisions. By analyzing your data, you may make well-informed decisions for the next fiscal year that can improve revenue, cut expenses, enhance profit margins, and accelerate success.

3. Analyze Statements of Cash Flow

Examine the previous year’s cash flow numbers in great detail. When studying these financial accounts, you should be on the lookout for obstacles (cash flow limits) you experienced and attempt to determine why these issues occurred. You should also attempt to identify any noteworthy patterns so that you can include them in your strategic planning and cash flow projections for the next year. Your company may have had a seasonal cash flow shortfall as a consequence of poor demand, supply chain issues, or another issue that may reoccur. If so, begin making preparations to address them immediately so they do not become a problem in the future.

4. Tax Year-End Planning and Strategy

Consider the tax implications of your company’s income and expenses at the end of the year. Consult your accounting team or CPA about making any last-minute adjustments to minimize your taxable income and enhance your company’s tax position before the end of the year and the completion of your financial statements. Some of the things to take care for tax season are;

• Your income for the year and the potential tax liability
• Ways to minimize your tax liability
• Business use of home expenses
• Business use of personal vehicle
• Claiming previous year non-capital losses
• RRSP and TFSA contributions
• Other investments to help with tax planning e.g. purchasing new equipment at year-end
• Incorporate your business
• Align your short-term and long-term goals

5. Review Last Year’s Goals

Devote some time to thinking about your finances, reviewing your goals from the previous year, and analyzing the variance between your budget and actual outcomes as the year-end planning process. Discussing this with your Advisor will allow you to go further and formulate better ideas.

6. Recognize Issues and Find Solutions

Take the time to determine what went wrong and why you and your organization missed any traps, failures, or other indicators throughout the previous year. Examining these issues will make it simpler for you to identify the limiting factors in your firm. Consider what may be done differently to eliminate the limitations in your business (& yourself). Then, concentrate on the most viable ideas and devise a plan to implement them within the next year.

7. Celebrate Success

At the end of the year, you should also congratulate yourself and your team for successfully navigating yet another challenging business year. Examine what worked and how you accomplished it to replicate your success in the future by reflecting on the goals attained and the met or surpassed expectations.

For a business owner to be successful in avoiding both financial and logistical challenges, careful preparation is an absolute must. Get in touch with us to help you with your year-end planning process for your business.