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How to Conduct an End-of-Year Business Finance Review

Small Business
Small business owner at work after conducting an end-of-year business finance review in his workshop

A year-end business finance review can help you understand how your business performed based on your goals and growth strategy. It can also be an excellent time to consider how you'll position your company during the coming year.

Focus on these key areas to conduct a simple yet insightful year-end review for your business.

Review Your Books

The ability to interpret business financial documents can make you a more informed and empowered business owner, even if you generally rely on an accountant or bookkeeper to handle the details. Review these statements as part of your business finance review:

  • Balance sheet: Your balance sheet shows your business's assets (like cash and similar resources that have value), liabilities (debts, loans, similar amounts owed) and equity (what's left when you subtract your liabilities from your assets) over a specific period of time. Reviewing this information near the end of the year gives you a sense of your business's financial health throughout the last four quarters.
  • Profit & loss statement: Sometimes referred to as a "P&L" or "income statement," this document tells you about your business's revenue, costs, and expenses over a fixed period of time. You can use it to build year-over-year sales reports and forecasts.
  • Cash flow statement: This shows how much cash you have coming into the business, and how much is going out. Knowing your cash flow trends throughout the year can help you plan for times of potential shortage, such as when sales decline during slower months or expenses increase.

Check Your Taxes

You have several months before the official tax filing deadline for annual federal, state and municipal business tax returns. But even so, reviewing taxes before the end of the year allows you to take action on any remaining items of business that may have a tax impact. These could include charitable contributions, holiday gifts for employees or contributions to your retirement accounts.

If you hired independent contractors at any point in the year, confirm you have their completed and signed W-9 forms, so you're prepared to send any 1099-MISC forms you may be required to issue in the earlier part of next year.

If you've made quarterly estimated tax payments for the previous three quarters, you'll also want to confirm they're still an accurate reflection of the taxes you expect to owe based on your business's performance this year.

Consider Plans for Growth

Do you have plans to hire more employees, expand into a new space or buy more equipment? Take stock of what opportunities you may have to grow next year based on this year's performance; you can then review your sales and cash flow throughout various months to determine the best time to put those plans into action.

If you plan to borrow in order to grow your business, be sure to check your business's credit history so you can determine whether you're ready to pursue funding with a lender, or if you should prioritize building your credit history over the course of the next year.

Consult Others

Set aside time to meet with an individual who can provide you with the guidance you need to understand the risks and opportunities that may accompany any of the plans you have for your business in the coming year. Based on your financial needs and business plans, consider making appointments with any or all of the following in:

  • Financial representative: He or she can address questions related to financing, borrowing, optimizing cash flow, securing appropriate insurance coverage or offering financial benefits to employees, like retirement plans or tuition assistance. A financial professional can also help you understand whether changes in interest rates, business lending trends, tax laws or trade policies could impact your business.
  • Tax advisor: He or she can discuss any business-related tax matters, including how to structure your finances to potentially reduce your tax burden, or leveraging certain tax incentives that may be available to your business.
  • Attorney: He or she can answer questions related to your legal business structure and future plans for it, help you protect your business from lawsuits or similar legal risks, and advise on matters like succession planning, new investors and partnership arrangements.

An end-of-year financial review can provide valuable insights about your business's strengths and weaknesses, as well as any future opportunities. Follow these simple steps to conduct a review that leaves you informed and empowered to build an even stronger business in the coming years.

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Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.