The ultimate end-of-year financial checklist for your small business
Ah, the end of the year — that time when our thoughts drift between holiday celebrations, cozying up with a good book, and, of course, the looming reality of getting our business finances in order. As a small business owner, the latter can often dominate your headspace and your calendar as the year winds down.
That’s why we've crafted the ultimate financial planning checklist to simplify, streamline, and de-stress your year-end prep. With this roadmap, you won’t just navigate the end-of-year financial maze; you'll conquer it. Let’s dive in!
1. Prepare tax documents
While tax season is still a few months away, the end of the year is a great time to start preparing your tax documents. By gathering these documents beforehand, you're giving your future self a huge advantage. No more frantic searches or last-minute panic. Instead, you can charge into tax season confidently.
Small businesses and startups have many tax documents to keep tabs on, each crucial in their own right. While the specifics might vary based on the nature of your business and where it's located, here's a general list of the types of documents you’ll need to gather as the year comes to a close:
Income statements
Expense receipts
Previous year’s tax returns
1099-NEC and 1096 Forms
W-2 and W-3 Forms
While it may seem overwhelming, getting these documents in order can save hours of headaches in the new year.
2. Analyze yearly results with financial reports
Reviewing your financial reports at the end of the year helps you get a clearer picture of your financial landscape and empowers you to make data-driven decisions in the new year. These reports include your income statement, balance sheet, and cash flow statement.
Think of analyzing these end-of-year financial reports like giving your business a yearly physical. It's a chance to see how things went, good or bad. You get to spot trends and figure out where money was well-spent — or not. Understanding this year's big picture allows you to strategize better for the next.
We recommend utilizing tools that visualize data, making it easier to spot trends or anomalies. Regularly updating and revisiting these reports throughout the upcoming year can also ensure you stay on track and make necessary adjustments in real time.
3. Audit your business operations
Auditing your business operations is about critically examining how your business functions daily. For a small business, this involves reviewing processes like order handling, expense management, customer support, and supplier operations. It challenges the "we've always done it this way" approach, aiming to pinpoint areas of improvement. The objective is to make things easier, improve customer experiences, and potentially cut costs. This will ensure your business stays competitive and agile in the upcoming year.
To conduct a thorough and beneficial audit of your business operations, consider adopting modern tools like Expensify to provide analytics and insights into your daily operations. Expensify offers dashboards that showcase real-time metrics, highlighting areas that need attention.
As you work through your audit, don’t forget to engage your team. Those on the front lines often have unique insights and perspectives into operational bottlenecks and potential solutions that you might have missed.
4. Follow up on accounts receivable
As you work through your year-end financial checklist, it’s crucial to ensure your accounts receivable are up to date and reconciled. For a small business, managing this means regularly checking on outstanding invoices, sending payment reminders, and crossing those pesky preaccounting tasks off your to-do list.
Addressing accounts receivable at year's end ensures that you close your books accurately, covering any impending expenses and aiding in precise tax reporting. To do this effectively, we recommend investing in preaccounting software to automate and expedite some of the monotonous tasks that often get overlooked, like receipt collection and submitting expense reports.
Establishing regular check-ins and sending automated payment reminders can also help to ensure accounts receivable are ready to go as you wind down the year.
5. Review payroll, benefits, and HR
Taking the time to review and revamp your payroll, benefits, and overall HR approach isn't just an administrative task — it's an investment in the foundation and future of your business.
Gather payroll records and review your compensation policy to ensure you stay competitive in the hiring market as you enter the new year. Plus, for most companies, open enrollment for benefits is just around the corner at the start of the new year. Prep for this period by reviewing coverage plans and health insurance policies.
6. Back up all your devices
If you’re not already using cloud-based tech, backing up your digital assets isn’t just a suggestion — it’s a necessity.
It isn’t just about preventing data loss from potential technical glitches or malfunctions. It's also a safeguard against unforeseen disasters, like fires or floods, and even cyber threats, like ransomware attacks. Not having a backup in these situations can lead to significant hold-ups, loss of client trust, or costly downtime as you scramble to recover or recreate what was lost.
And backing up devices is more than just a one-time event. As you work through your end-of-year financial checklist, consider setting a regular backup schedule in the new year and utilizing both physical drives and cloud solutions for added layers of protection.
7. Review your training process
The end of the year is a prime time for reflection and preparation. Looking back at how new hires adjusted and performed can offer valuable insights. For small businesses, efficient onboarding means higher productivity, fewer errors, and happier employees.
Start by gathering feedback from recent trainees about their experience. Were there topics they wish had been covered? Use this info to tweak your training materials and methodology. Consider integrating interactive modules or mentorship programs to make the process more engaging and effective. Also, schedule time to update managers and staff on protocols and compliance to ensure everyone is on the same page moving forward.
8. Revisit vendor contracts
You might've found a great deal earlier in the year, but markets change, and so do vendor offerings. Reassessing contracts can help you find better deals or terms, especially if your business needs have evolved.
Before contracts renew, lay them out and compare services and prices. Don’t hesitate to negotiate terms or even switch providers if it means better service or cost savings. Loyalty is lovely, but the business should always come first.
9. Assess your website's ROI and optimize for conversions
As you evaluate year-end financials, don't overlook the ROI from your website. A site that isn't converting visitors or keeping them engaged might be leaving money on the table. Audit your site to ensure information about products, services, and pricing is current, and address any outdated elements that could cause potential customers to bounce.
Remember, it’s not just about aesthetics — it’s a great opportunity to delve into your site analytics. Which pages or products are driving the most revenue? Which ones aren’t? By understanding this, you can allocate resources more efficiently and convert more customers in the coming year.
10. Review your insurance policies and 401(k)s
As the year draws to a close, ensuring that your coverage keeps pace with your growth is crucial. Schedule a sit-down with your insurance provider to dive deep into the changes that have unfolded over the year. Every detail counts, from staff numbers to new equipment and even changes in business locations.
Also, think about the future. Are you planning a significant investment or expansion soon? Make sure that’s part of the conversation. It’s way better to be over-prepared than caught off-guard.
Lastly, do some shopping around. Rates and coverage options change, and sometimes, it’s beneficial to see if there's a better fit elsewhere. By fine-tuning your insurance policies at the end of the year, you're protecting your current assets and setting up a safety net — effectively future-proofing your business.
11. Revamp your processes
Efficiency is the name of the game. If certain tasks consistently become bottlenecks, it might be time to ditch your manual processes and let technology take the front seat. Updating these outdated operations can save time and money — in the new year and beyond.
Start by identifying any recurring issues or delays — check in with your team leaders to help with this review. Once you've pinpointed the holdups, brainstorm tools to help you automate those tedious tasks like tracking expenses or managing receipts. By transitioning to a more organized and efficient system, you can transform what was once a cumbersome chore into a smooth, streamlined process. Plus, this time next year, you’ll breeze through your end-of-year financial checklist.
12. Conduct an inventory review
Whether it’s products on shelves or software licenses, you don’t want to overstock or underutilize. A clear picture of your inventory helps with future ordering and budgeting in the new year.
Designate a day for a thorough count and review. Use inventory management software, if possible, to track usage trends and make future projections.
13. Thank current clients for their business
Building solid relationships isn’t just good manners; it’s good business. A simple gesture of gratitude can pave the way for continued collaboration and referrals.
Personalized thank-you cards or even small gifts can leave a lasting impression. Remember, it's the thought that counts. Plus, client gifts are tax deductible up to $25 per gift.
14. Set next year’s budget
With a whole year's worth of data at your fingertips, now’s the time to make informed decisions for the coming year.
Review the past year's expenditures and income. Identify areas of unexpected costs or revenue and adjust your future budget accordingly. Consider leveraging spend management software or consulting with a financial expert to ensure a well-balanced budget.
Looking ahead: Small business financial advice for the new year
Stepping into the new year always brings a mix of excitement and anxiety for small businesses, especially on the financial front. But at Expensify, we strive to make money matters stress-free. We've dropped our tried-and-true financial best practices below to give you a leg up as you chart your course for the upcoming year.
Embrace automation: Modern expense management tools like Expensify significantly reduce manual tasks, enhancing accuracy and efficiency across the board. Plus, we integrate with leading accounting platforms so your financial data stays in sync. By automating your manual tasks in the new year, you can significantly minimize your workload and use the time you get back to focus on your big ideas.
Declutter the paper trail: If you’re still carrying around paper receipts in your briefcase, you’re doing it wrong. We recommend adding a receipt-scanning app to your list of must-haves so that every expense is recorded accurately, promptly, and in one centralized place.
Categorize your business expenses: By sorting your expenses as you go, you’ll save yourself tons of time during tax season. Consider using a company credit card, like Expensify’s, to keep track of business expenses and categorize and update them in real time.
Think global: If you're engaging with international partners, be ready for diverse reimbursement scenarios. We recommend using a system designed for global reimbursements that ensures seamless and compliant transactions — whether you’re sending money across town or across the globe.
With these strategies in your back pocket, the financial journey ahead becomes more manageable and efficient — and with Expensify as your financial ally, you're well-prepared to navigate the year's challenges with ease.
End-of-year finance common questions
Below, you'll find a roundup of some common financial questions that always seem to pop up right before the new year. Hopefully, our answers can make your life a bit easier. After all, you have more important things to worry about.
What reports are needed for a business nearing year-end?
The financial reports you’ll need to gather at the end of the year are:
A balance sheet
A cash flow statement
An income report
An auditor’s report
Don't forget to add a written summary detailing any significant financial shifts that occurred throughout the year. Armed with these comprehensive reports, you’ll have everything you need to close your books and make informed financial decisions in the new year.
How do I do end-of-year accounting?
You can rock end-of-year accounting by completing the following steps:
Collect financial documents: Begin by gathering all your financial paperwork, like receipts, invoices, and bank statements.
Match documents to records: Compare these documents to your existing records to ensure there aren't any mismatches.
Review income and expenses: Examine all your income and expense records and make any necessary adjustments.
Monitor outstanding transactions: Look out for any pending payments or money still owed to you.
Use accounting software: If you want to make this process a little easier, leverage accounting software to automate many of these tasks for you.
Consult with an accountant: Whether you use digital tools or not, it’s always smart to chat with an accountant to make sure you haven't overlooked any details.
End-of-year accounting is all about ensuring your financial records are tidy and accurate before the year closes out so you can walk confidently into the new year. Continual education is also important. Learn more accounting lingo like debit vs. credit accounting so you start the next year off strong.
What is end-of-year bookkeeping?
End-of-year bookkeeping is the process of finalizing and reviewing all financial transactions of your business for the fiscal year. This includes double-checking that all financial entries, such as income, expenses, assets, and liabilities, are recorded accurately and reconciled with actual bank statements and other financial documents.
It’s an important step to provide an accurate snapshot of your company's financial health, prepare for tax filings, and set the foundation for the upcoming year.
End-of-year finances are a breeze with Expensify
Wrapping up one business year and ringing in a new one is no small feat, but with this checklist and the array of tools that Expensify offers, the process doesn’t have to be daunting. With Expensify on your side, you can close out the year with the assurance that your finances are in top shape — and charge confidently into the next one.
