Every business faces a similar set of challenges at the end of the year: closing the books on the past twelve months while preparing for the calendar year ahead. In this article, we’ll walk you through nine key touchpoints that belong at the very top of your business’s end-of-year to-do list.
To make matters even easier, we’ve created a Year-End Checklist for Small Businesses to keep you on track and organized. While this download highlights the most essential tasks your team should tackle every December, we’ve offered all the details about each action item below.
1. Audit your inventory
Whether your business carries a little or a lot of inventory, an in-depth, accurate audit of physical inventory is a can’t-miss step on your list of end-of-year accounting responsibilities. Utilizing proven inventory audit best practices, physically count inventory wherever possible. With the help of an inventory app that offers automation features like barcode and QR code scanning, these audits can be conducted accurately and in less time than ever before.
To make these audits even less painless, adopt an inventory management system that allows you to track inventory perpetually. That way, your inventory records are accurate throughout the entire year, and you’re all the less likely to uncover any surprises during your end-of-year inventory count.
If you uncover discrepancies, look into what might be causing shrinkage, obsolescence, or overordering. Intervene as needed: update standard operating procedures, rethink how you organize inventory, and plan to retrain employees when necessary.
2. Touch base with your vendors
Take a day or two to reach out to your suppliers. Verify contact information, review pricing for the new year, and take a few minutes to discuss your plans—and concerns—for the coming year.
Your suppliers are one step closer to the top of your supply chain. Tap into their knowledge. They may have insights into changing trends, manufacturing concerns, transportation challenges, and more factors that could affect your business’s ability to procure the inventory you need when the time comes.
3. Close the books
Finalize your books in time to prepare critical financial statements for the closing year. Many businesses close their accounting periods before the holidays to ensure all work is done before the end of the year. Reconcile Accounts Receivable, and double-check payroll, bonuses, and benefits.
Even if your business does not employ an accountant, you can hire an accountant to help guide your business through this process.
4. Run key financial reports
All small businesses must prepare a few essential end-of-year financial reports in the year’s final days. From balance sheets to profit-loss statements, these reports should be prepared once the books are closed on the calendar year.
These reports can help your business prepare for the year ahead, calculate asset depreciation, determine tax liability, and analyze cash flow.
5. Review licenses and fees for the coming year
If your accountant or business manager does not keep track of licenses and renewals for you, take a couple of hours to sit down and create a calendar for managing these to-dos. From operating licenses to expiring certifications, clarify when renewals are due, who will handle them, and how much they’ll cost.
If these time-sensitive must-dos fall by the wayside, your business runs the risk of falling out of compliance, incurring costly late fees, and violating the law.
6. Double-check for changing laws
From state-mandated sick time to changes in time-to-vote policies, now is the time to verify if any new legislation—whether local, state, or federal—will affect your workplace. Whether you employ a human resources director, work with a consultant, or handle these matters independently, ensure your business is prepared to abide by new mandates starting January 1st.
This also includes updating required signage about wages, breaks, and employee rights in a clear, visible space.
7. Review your business’s IT assets
From backing up hard drives to performing an equipment audit, now is the perfect time to get a handle on your business’s physical information technology.
If you’re using inventory management software to track what assets are loaned out to which employees, accounting for all equipment—and verifying its condition—should be relatively painless. Determine whether everything is where it’s supposed to be, and ensure all equipment has been maintained as reported.
You’ll also want to consider “cleaning out” your electronics. Reorganize virtual folders, properly recycle equipment that’s no longer useful, and remember to account for virtual software and licenses, too.
8. Forecast demand
Now that your financials are in order, you can use that information—plus the insights you’ve gleaned from your suppliers—to make predictions about the next twelve months. Remember that your ability to forecast demand accurately can help you practice better inventory control, keep carrying costs low, and swiftly satisfy your customers’ needs.
While adjusting your predictions over time is okay, you’ll want to have at least some idea of how much cash you’ll need to buy inventory and assets over the next year.
9. Create goals
Finally, take some time at the end of the year to reflect and think about what’s next for your business. What are your goals for the new year? How much do you want to grow and scale your operations? What types of customers or jobs should you focus on? What is your hiring headcount, and what skills do you want those hires to bring? How can you achieve more efficiency in the year to come?
Whatever your wishes for the next twelve months are, articulate those goals—and start thinking about what it might take to achieve them.
Sortly is a top-rated inventory management software designed to help small businesses take control of their inventory. With key automation features that speed up both everyday inventory processes and large end-of-year audits, Sortly was engineered to streamline every aspect of your inventory management strategy.
Curious about how Sortly can help your business do more in 2023? Start a free, two-week trial today.