As your company heads toward the end of the year, wrapping up your finances for the year’s end is a crucial step to ensure your company is in the best place to start the new year. Setting some time aside now will help you prepare for tax season and help alleviate errors and mistakes, saving your business money and time.
Taking time to prepare your finances will pay off in big ways. This is especially true for small businesses that are just getting off the ground. Tying up your finances for the current year will play a key role in your success for the next year, and several key steps should be taken no matter the size of the business.
1. Put Together Your Balance Sheet
Your company’s balance sheet is a snapshot of your company’s liabilities, equity, and assets for the year. The balance sheet is broken down by assets on one side and liabilities and owner’s equity on the other, and both sides must be in equilibrium when you close out your books. In simple terms, liabilities and equity are what the company owes (debt, accrued income taxes, accounts payable, etc.), and assets are what is owed to the company or currently owned (account receivables, property and equipment, inventory, etc.). In addition to this report, the company’s cash flow statement will show the net income that your company has attained.
2. Prepare Your Taxes
Taxes are certainly not the highlight of the year, but it is imperative to work on your taxes as the year wraps up because tax season will be starting. The sooner you have your tax information ready means the sooner your company’s taxes can be finished. Having your taxes finished will also give a good idea of your company’s current financial standing and the projected future. In companies where the fiscal year matches up with the calendar year, they have to send in their tax forms before the next year’s deadline. Even if the fiscal year does not coincide with the calendar year, a few of the tax deadlines might still apply, and it is crucial to meet with your accountant to make sure everything is squared away as you prepare your company for the end of the year.
3. Clean up Your Company’s Books
After you have reviewed your accounts and assessed your company’s finances, you might find a few pressing matters like missing documents, improper vendor information, past due receivables, and anything similar you may want to fix before the year closes. While you may want to avoid fixing small inconsistencies, poor accounting will ultimately put your company in a compromising situation. By simply taking time to tackle these problems now, your company will be left in a better position with more organized financials.
4. Refine Your Company Budget
Review your company’s financial statements to determine areas where you are overspending. Being organized in regards to your company’s financing will trickle down into each area of your operations, which explains why it is very important that you follow your budget as close as possible. As you go through your year’s expenses, you can make plans to adjust the next year’s budget to keep you from overspending again.
5. Handle Any Legal Paperwork
Even for small businesses, establishing your company as a legally recognized business is crucial for its financial future. The IRS provides small businesses with guidelines regarding the different types of business classifications, and this needs to be determined in order for you to properly file your taxes. To make sure your company is actually recognized as a legal business, you should take time at the end of the year to ensure all your paperwork is in order, and this will assist in alleviating unforeseen problems in the future.
No matter where your business stands at the end of 2017, you can still make some changes to ensure your business is even more successful in the coming year. By taking the time to properly manage and assess your company’s finances, prepare your taxes, and set your budget for the coming year, your business will be set up to thrive in the coming year.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
Alex Briggs is a contributing writer for Benham, Miller, and Harris Inc. In his spare time, he enjoys traveling, reading, and spending time with his family.
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.