The Small Business Year-End Checklist You Need for 2022 Success

As the end of the year rapidly approaches and focus shifts toward celebrating holiday events with family and friends, all small business owners need to take a beat to conduct a thorough year-end business review.

Luckily, once you complete a few crucial tasks on your small business’ year-end checklist, you’ll be ready to put a bow on this year and happily ring in the next conscious that you won’t be as burdened at tax time. 

Note: Federal, state, and local taxes can vary. Be sure to contact your accountant or tax analyst for specific details and requirements related to your business’s best year-end practices.

Here are a few end-of-year tasks to tick off your year-end appraisal that will allow you to wrap up your professional year and spend more time focusing on the personal elements of the holidays that we all love.

1. Conduct a business analysis of 2021 financials.

Having a clear-cut understanding of where your business stands financially is your first priority in order to set realistic 2022 goals. 

Generate a financial report that includes your annual income statement, balance sheet, and cash flow records to see at a glance what the outlook is for your small business in the new year. 

Your cash flow statement indicates whether you’re generating more income than you are spending throughout the year by analyzing your operating activities, investing activities, and financial activities.

If profits are healthy, consider it an opportunity to explore new offerings, or make big-ticket purchases with the blessing of your accountant that can explain the rules of depreciation.

However, if you discover that profits have fallen off from previous years or your cash outflow is exceeding your cash inflow, now is the time to evaluate those shortcomings with your accountant to reconfigure your business plan for the future.

2. Align inventory quantities and records.

Accounting for your inventory value is a vital piece of tax information. Inventory value is the area that must be completed on the last business day of the year or before you sell anything on the first business day of a new year. 

Begin by completing an accurate on-hand count of inventory items, then use your software to generate a report or calculate by hand the business’ total inventory value for your accountant. If you notice any discrepancies in your counts, now is the time to investigate to avoid any internal loss.

While on the subject of inventory, set aside time to evaluate your existing vendor relationships. 

Purge your database of any inactive partners or update inaccurate information for the future. If you have planned to switch vendors or negotiate better rates, use this time to fulfill those goals.

3. Reconcile accounts receivable and collect on past-due accounts. 

Have any unpaid invoices piled up on your books? Not getting paid in a timely manner is one of the primary pain points for a small business owner. 

Run an account balance report or generate a list of current balances owed to the business by your clients. Try to collect these outstanding billable items before the end of the year to boost your cash flow going into the new year.

For any payments not collected, a total of the outstanding balances should be retained as part of the business’s year-end tax documents. If the quantity of pending invoices is significant, consider calculating your accounts receivable turnover ratio to determine whether the rate at which your business collects revenue needs improvement going forward.

4. Collect tax documents and essential records. 

Speaking of tax documents, gather them now. 

Begin collecting records you know will be needed when filing this year’s return — such as a 1099-NEC form, 1096 form, W-2 forms and W-3 forms, and state and federal payroll returns annually or quarterly — and put them in safe place for when tax season rolls around.

Find receipts for deductible expenses, taxes paid, taxes collected, and other relevant documentation. Print important year-end total reports. Ensure employees records, including employee payroll and benefits, are complete and accurate.

5. Review and set new goals. 

Evaluate how closely the business came to meeting the objectives for the year. Use your financial statements, along with customer and employee feedback, to analyze whether you accomplished the goals you set out to achieve.

In addition to overall growth, revenue, and profitability, consider the individual successes of your staff. Award bonuses and raises where appropriate. 

Set weekly, monthly, quarterly, and annual goals for the upcoming year, including financial goals, management goals, and customer goals. 

Before the new year, have a plan in place for how and when the goal results will be tracked and shared, and how you will nurture their success as the year progresses.

If you are currently an Inspire software user, click here to check out recommended year-end procedures. Not an Inspire subscriber? To learn ways to simplify your year-end procedures, check out Inspire.