Year end is a scramble for most businesses between the flurry of closing last minute business, finalizing budgets, year-end bonuses, not to mention managing around vacation schedules and the holidays. The end of the year is also a critical time to observe what is going on in the business from a financial and compliance standpoint. Many tasks only happen this time of year as opposed to recurring monthly items. The end of one year and the start of the next is already a very busy time for your finance team, so being proactive is critical.
Are year-end processes tight? Could critical things be missed with the 12/31 cutoff that could create headaches down the road? Do you know what happens in year end at your business, or even better, what needs to happen? You need to and here are a few tips to finish the year with fewer sleepless nights.
• Talk to your tax accountant proactively before the year ends. Make sure to have a conversation about what wages or owner compensation need to get paid before 12/31. Should that equipment purchase get made? What about 401k contributions? Each business will have its own unique decision points, so the conversation is the key step. Regardless for most taxpayers timing can be absolutely everything, so make sure it is on your terms.
• What is the process for ensuring timely and accurate tax filings? The IRS has been paying more attention to things like W-2s and 1099s. Are you able to get them out timely in January? What payroll requirements do you have? Do you know what your payroll provider is doing versus what needs to get done internally?
• What reporting requirements do you have externally, whether a lender, key suppliers or customers, franchisor/franchisee or licensor/licensee? What is required and when? These requirements can often be different from what occurs throughout the year.
• What about your financial statements specifically? What year end cleanup needs to happen in the financials? Are there stale asset and liability accounts that have become a parking lot throughout the year? Are there reserves that need to be revisited? If your business has a 3rd party CPA Review or more critically an Audit, items like inventory could need to be evaluated at year-end. Is the necessary work scheduled?
• What compliance requirements exist? This could be anything from specialized licenses, insurance policies, or contracts. Many accounting systems also have key steps that need to be taken to properly close one year and open the next, ensuring proper cutoff of sales, costs, etc. Do you? Have you asked?
• Ensure your company has a thorough year end checklist with key financial and compliance tasks with deadlines. Ask your team to review it with you. And equally important might be to help reprioritize. Given the one-time nature, might it take a little more time to complete some normal recurring tasks? That may not only be acceptable but necessary to the bigger picture. The time to negotiate that is now.
Too often, we see missed deadlines, added stress on the team, and strain on the business overall. By proactively reviewing this now, and then creating a more defined roadmap for the future, a lot of frustration, burnout, and even lost money can be avoided. This is a very busy time, but also the most critical time to be proactive. Start today – it will make for a much Happier New Year!
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