If you’re like us, you’re caught up in the holiday whirlwind – decorating, visiting, celebrating, shopping, and hopefully reflecting on the past year. Have you met any new people that have made an impact on your life or business? Have you achieved your personal goals?  Is your business where you hoped it would be by now?

The best way to answer that last question is to take important year-end preparation steps. Now, it’s important that you relax and have some fun these last two weeks of December, but it’s just as important to take some time to be all business so you close out the year right and set yourself up for success in 2015. As accounting and productivity specialists, we at Price Turner CFOs of course have something to say about this!

Here are some crucial steps you and your team can take to prepare for year-end. 

1) Get your books in order. Whether you’re using a pencil and notepad or a sophisticated software system to keep track of your books, you have to have a consistent, reliable system in place. Are you happy with your system?

2) Record transactions and reconcile accounts. For starters, it’s good accounting practice for a business to have a separate bank account, and make all business expenses from that account and never from your personal account (and vice versa). Make sure all of your deposits and expenses are recorded, and if you did make any expenditures from your personal account, ensure they make it into your books. The same goes for cash expenses and loan payments – double check that they’ve been entered. If you’re not reconciling all of these transactions monthly, it’s essential that they are at least done right after the end of your fiscal year.

3) The bottom line: reviewing your Profit and Loss Statement. The big question that needs to be answered is, how did your business do this year? This can’t be answered without all of your transactions being properly recorded in their proper category (as income or expenses).  Be sure to review the statement for every month’s balances as well as for the year as a whole.  Do the monthly amounts seem reasonable to you? Often, an anomaly may occur, which, when further investigated, shows an incorrect classification or transaction.  

Determine if you earned a profit this year (income is more than the expenses), or if the business is operating at a loss (income is less than the expenses).  If the latter is the case, it’s time to think about what changes you can make to avoid the same situation at the end of 2015. And if you’re in the black, ask yourself if there are changes you can make to processes, systems and sales efforts that will make you even more profitable next year.

4) Tracking how far you’ve gone. Literally. One item that’s often overlooked as a legitimate expense on the business income statement is mileage. If you don’t expense the actual costs related to the vehicle (gas, insurance and repairs), then you may be able to have a tax deduction based on your business use of the vehicle (but not on your personal use of the vehicle). In order to do that, you need to keep a log of how many miles were business-related. Unfortunately, these miles don’t include your commute between home and the office. It does, however, include mileage from your office to client meetings, networking events and other business activities.

5) Cash is still king. Where’s yours? Do you have a clear list of who owes your business money? If you’re lucky enough to invoice clients and get paid immediately, that’s wonderful! But many companies don’t get paid for 30, 60 or 90 days. It’s the end of the year and most companies operate on a cash basis, so it’s important to review outstanding invoices and have a clear picture of where you stand. Keep in mind that any cash received in December will also be part of your income for this year and taxes will need to be paid on it. If your Profit & Loss Statement review showed that your business is at a loss for the year, do what you can do bring in cash now. But if you’re able to defer the income from a business perspective, defer the cash receipts until the next fiscal year (just be sure you don’t lose the receipt by deferring it.)

Get started on finishing up!

After reviewing these tips, hopefully you’re thinking, “I’ve already done that!” after each one. But if you haven’t, give us a call and we can help get your business ready for the end of 2014 so you can spend more time enjoying the season.

Finally, we wish you a joyous holiday season and thank you for another great year!