For many people, the end of the year means shopping for last-minute gifts, going to holiday parties, and maybe working in a few final days of paid time off. For small business owners it's often a little more intense. You're not just winding down 2011, you're gearing up for 2012.
That's why along with your shopping list and New Year's plans, you should also be making a year-end check list—and checking it twice.
Here are five things I think should be at the top of your list.
- Reserve cash for taxes. It’s important to remember that even if you've had a good year, cash is not the same as profit. You don't want to get hit with a big tax bill on April 15 that's going to deplete your cash reserves. The end of the year is an excellent time to shore up your balance sheet.
- Be ready to file. Along with the cash supply, you want to have all the right documents in place for filing taxes. Remember, if you terminated an employee back in March, you still need to file his W-2. Also, incorrect Social Security or name information on a W-2 could lead to penalties, you have to account for 1099 employees, and the list goes on. Don’t wait until the last minute to put everything together.
- Eliminate insurance headaches. Give your agent or payroll provider a call and make sure you're covered and up-to-date. A great example is workers' comp insurance. The old way of doing it was to pay a big premium based on your number of employees and risks associated with your business (you’ll pay more if you're selling knives), and then face the possibility of an audit at the end of the year that could mean another big check. With pay-as-you-go, offered in partnership with payroll companies, it's a bimonthly payment and both parties know the risks, so there are no billing surprises.
- Review your suppliers. You may be paying more than you have to for various suppliers. In today's market, cloud computing and software can you save a lot. Online tools to help you manage customer relationships, content, and expenses are all typically less expensive than traditional software.
- Build your road map. Don't forget about the big picture while you're taking care of the nitty gritty. You need to have a vision for the future. Where is your company going in 2012? What are your goals? How will you grow from what you've learned so far?
These last questions are not easy to answer. In fact, I think they require a separate column. Next month I'll write about resolutions for the new year.