Year-End Preparation: 5 Key Tips for Small Businesses

As the new year is quickly approaching, now is the ideal time for small businesses to ensure their financial health is in good standing. If you are already looking to plan and strategize for the end of the year, you are one step ahead of the game! It’s time to start talking business and set yourself up for a successful year ahead. Here are five essential tips for wrapping up the end of the year and starting the next off strong!

1. Organize your financial records.

The foundation of a successful year-end preparation greatly relies on having organized and up-to-date financial records. 

• Review your income and expense reports to ensure that all business transactions are categorized accurately. 
• Reconcile your accounts by matching up bank statements, credit card statements, and any balances for accounting software. 
• Track down all important financial documents. Remember, things like receipts and invoices tend to be easily overlooked! 

Doing these things can provide you with clear and accurate details on your business’s performance while also setting you up for a smooth year of tax preparation.

2. Evaluate your tax strategies. 

Proactively pre-planning for tax season can save you money in the long run!

• Review your deductible expenses by maximizing your deductions and ensuring all eligible business expenses are documented.
• Consider any necessary end-of-the-year purchases or upgrades your business might require. These investments must be made before December 31st to be considered a tax write-off.
• Prioritize making the time for a tax consultation. Explore tax-saving strategies – such as retirement accounts or deferring income – to reduce tax liability and minimize the chances of losing money.

3. Analyze your business performance.

To gain valuable insight into the year ahead, you must first review and reflect on the performance of your business. KPIs, or Key performance indicators will provide you with a clear view of the overall health of your business.

• Take the time to review these things – along with your revenue growth, profit margins, and customer acquisition trends.
• Pinpoint areas in which your business thrived and others in which it didn’t.
• Establish new goals for your business using data-driven, realistic, and measurable objectives for the year ahead. 

4. Plan for cash flow and debt management.

To predict and forecast cash flow, you must first anticipate your income and expenses for the first quarter of the next year.

• Prioritize reducing any outstanding debt you may have! Do your best to pay down high-interest loans or lines of credit.
• Plan ahead by allocating funds for any emergencies or opportunities. Establishing a healthy cash flow and less debt lets your business run more smoothly and efficiently when approached with unexpected challenges.

5. Prepare for any end-of-the-year deadlines.

BOI Mandatory Filing – January 1st  – https://bit.ly/3ZvlNoS). 

The BOI filing deadline is January 1, 2025, for companies created or registered before January 1, 2024. Companies created or registered after January 1, 2024, and before January 1, 2025, will have 90 days after receiving notice of company creation.

Required Minimum Distributions – December 31st

Take the required minimum distributions from your tax-deferred retirement savings accounts (IRAs + 401(k)s) every year beginning at age 73. The amount you need to withdraw is based on the life expectancy table for your current age and the balance in your account by December 31st of the previous year. 

Calculate your required minimum distribution amount:

https://www.irs.gov/forms-pubs/about-publication-590-b

You can delay taking your first RMD to April 1st of the following year. Following that, you should take RMDs by December 31st each year. Starting in 2024, you WILL NOT have to take RMDs from any Roth accounts.

529 Contributions due in *most* states – December 31st

• Georgia, Mississippi, Oklahoma, South Carolina, Wisconsin: April 15th
• Iowa: April 30th

Many states allow you to take an income-tax deduction for contributing to a 529 college savings plan. Most states’ deadline is December 31st for the contribution to count for the current tax year. On the other hand, 2024 contributions in Georgia, Mississippi, Oklahoma, South Carolina, and Wisconsin have extended deadlines.

Estimated Fourth Quarter Taxes – January 15th

Quarterly estimated taxes are due by January 15, 2025, for the money earned from September 1st to December 31st of 2024. If you are currently self-employed or do not have taxes withheld from any rentals, investments, or other income – you may need to pay quarterly estimated taxes.

TIP: This tax deadline is important if you took large withdrawals from tax-deferred retirement savings in the last quarter of the year and did NOT have any taxes withheld from your distribution.

Final Thoughts

While it may appear overwhelming, following these tips will allow you to close out this year with confidence and ambition for the year ahead. Don’t hesitate to seek help or advice from a professional.  We want to ensure you get the most out of your tax strategies! A little preparation can reap large rewards in the coming months. Wishing you the best of luck as we approach the new year!