End-of-Year Financial Prep: Three Essential Steps for Business Owners

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As the year winds down, many of us find ourselves grappling with a lengthy to-do list and an unrealistic expectation of accomplishing everything before the holiday season is upon us. Shannon strategically tackles this topic on her podcast, Keep What You Earn. In an enlightening episode titled "End-of-Year Financial Prep: Three Essential Steps for Business Owners," Shannon shares practical advice to ensure a smooth financial transition into the new year. Here's a detailed look at the essential steps Shannon highlights.

1. Catch Up on Bookkeeping

Bookkeeping often becomes a daunting task that many business owners tend to delay until the last minute. Shannon articulates the significance of catching up on your books, emphasizing it as the first and foremost step toward a stress-free year-end. Ideally, you should aim to have your books up-to-date through the end of September, giving you a considerable head start before the chaos of the holiday season.

Shannon underscores, “You reach out to a bookkeeper in January and you're like, can you do my books for all of 2023? They're going to charge you a lot of money because it is go-time for them.” She points out the financial implications of delaying bookkeeping, not to mention the strain it can place on your relationship with your accountant or bookkeeper.

The act of maintaining your books regularly helps you understand your business's financial health, aids in making informed decisions, and facilitates effective goal-setting for the upcoming year. Shannon asserts, “If you don't have your numbers ready, you have no idea how you're performing, you have no idea where your metrics are at.” Hence, it’s crucial to prioritize updating your financial records as the first step.

2. Secure Your Tax Professional

With the tax filing season wrapping up, the period between October 15th and December 31st is relatively quieter for tax professionals. Shannon advises taking advantage of this downtime to secure a reputable tax pro.

She offers practical insights into making this process seamless: “This is the time when you know your accountants are approachable and you can say, hey, I would like to lock you in to do my taxes for next tax season.” By doing this, you ensure that you have a competent tax professional dedicated to handling your finances when the next tax season begins.

To assist business owners in finding the right tax professional, Shannon introduces a resource called Money Pro Matchmaker. This tool is designed to help you evaluate potential accountants, understand the services they offer, and get a comprehensive view of what you should expect from them. By being proactive, you get first priority when tax season kicks in, avoiding the mad rush and ensuring you receive the best possible service.

3. Review and Prepare 1099s

The final step Shannon sheds light on involves a seemingly minor yet crucial task: reviewing vendor payments for 1099 preparation. By ensuring your books are updated through at least the end of September, you can effectively identify vendors who need 1099s for the past year.

“If you paid over $600 to a particular business entity that offered you services through methods like cash, ACH, check, or Zelle, then it is likely you will owe them a 1099 in January," Shannon explains. Gathering necessary documents like W9s early helps you avoid last-minute scrambles and ensures all your filings are in order well before deadlines hit.

Taking time to prepare these documents not only alleviates stress but also fortifies your business’s compliance with tax obligations, potentially saving you from penalties and audits.

Shannon’s actionable steps are aimed at making the financial aspects of running a business less daunting. From catching up on bookkeeping to securing a competent tax professional, and preparing for 1099 submissions, these steps can significantly lower stress levels and place you in a better position to hit the ground running in the new year.

As Shannon poignantly notes, “What's your time worth? What's your peace of mind worth?” Investing in the right financial processes and professionals can lead to a streamlined, stress-free tax season, leaving you more time to focus on growth and innovation in your business.

By following Shannon’s advice and prioritizing these essential financial steps, you can ensure you "Keep What You Earn" and head into the new year with confidence and clarity. If you find yourself needing further guidance, Shannon’s Money Pro Matchmaker is an excellent resource to get started on the right track.

What you'll hear in this episode:

01:48 Finish big tasks by Thanksgiving to de-stress.
03:36 January requests: Expensive; bookkeepers are busiest then.
07:36 Use Money Pro Matchmaker for choosing professionals.
11:35 Prepare early to avoid winter stress.

If you like this episode, check out:

The Truth About Tax Savings and Strategies

Is Hiring A Tax Strategist For You?

Why You Want to Avoid Tax Extensions

Want to learn more so you can earn more?

Download the Money Pro Matchmaker tool here

Visit keepwhatyouearn.com to dive deeper on our episodes

Visit keepwhatyouearncfo.com to work with Shannon and her team

Watch this episode and more here: https://www.youtube.com/channel/UCMlIuZsrllp1Uc_MlhriLvQ

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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.