It’s beginning to look a lot like … end-of-year project wrap-ups, holiday gatherings and celebrations, and time off to rest and reset for the new year.
Before you log off, there are a few things to do as a small business owner to button up 2022 and prepare for your tax filing. Crossing these items off your list will bring peace of mind and give you more time to focus on those 2023 goals as soon as the ball drops.
Here are four things you can do before the end of the year to make tax time less stressful:
1. Update your payroll records or hire out
This is the time to verify all employee wages, benefits, and deductions. Be sure to double-check employment tax rates that tend to change annually. You or your payroll specialist should also make sure all paychecks, year-end bonuses, and payments have been recorded.
2. Gather or prepare financial documents for your accountant
- Year-End Balance Sheet: This statement includes assets, liabilities, and owner’s equity of your business. The Balance Sheet can help you determine if you may want to look at working on collecting receivables or paying down debt in the coming months.
- Year-End Income Statement: Here, you’ll see the comparison between earnings and spending throughout the year and will determine a company’s net income for the year. The sheet should have a clear list of revenue in one section and a list of expenses and losses in the other. Subtracting the expenses and losses from the revenue will show the net income. The Income Statement results can help you determine where to cut or increase spending for the next year.
- Year-End Cash Flow Statement: A Cash Flow Statement shows how much cash a company has at the beginning and end of the year, and how the cash was acquired or disbursed. Cash flow can come from operations, which includes revenue and expenses; investments, including assets bought and sold; or financial decisions, like loan proceeds received and payments made.
3. Review your 2022 goals
Taking a close look to see which goals were achieved and which fell short can help you and your team create attainable goals for 2023. Taking a SMART (Specific, Measurable, Achievable, Realistic, and Timely) approach to your goals each year can create a path for consistent growth and highlight areas of opportunity along the way. One example could be adding time each month to update financial and tax records for 2023.
4. Celebrate
It’s the season of giving, joy, and putting a bow on another year. It’s the perfect time to show your employees how much they’re valued. Employee morale events provide the opportunity to reward team members for all their hard work. Showing appreciation can come in the form of a holiday celebration, extra time off, flex hours, or repurposing company time for a charity drive.
Taking the time now to prepare for 2022 tax filings and develop your 2023 goals can relieve pressure and make room for you to shift gears to celebrate the holidays and ring in the new year.
If you’re looking for a payroll specialist or on-site bookkeeper to help you get (and stay) organized, contact our office.
On behalf of the DMA team, happy holidays!
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