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The Year-End Business Checklist for Busy Entrepreneurs

By Catherine Hodder, Esq. | Last updated on

Depending on the industry, business between Thanksgiving to New Year's Eve may slow down. If that is the case for you, it is an excellent opportunity to review your successes from the past year and look for new opportunities in the coming year. And even if your business picks up during the holiday season, there are essential tasks to do before the year's end.

Use our end-of-year checklist to keep your business on track and compliant with legal and tax requirements.

Organize Your Financial Statements

It is critical to have your year-end balance sheet and profit and loss statement (income statement) to prepare for taxes and understand how your business is doing. And if customers owe you money, send out accounts receivable statements to get paid by year's end. Many small business owners use accounting software, such as Quickbooks, that generates financial reports and cash flow statements to help them organize financial information and bookkeeping.

Gather Your Receipts

You can deduct your business expenses from your business income. Review your credit card statements and capture any expenses made for your business. Any tax preparation you do now will save you time when it comes time to file your taxes.

Determine What Tax Forms You Must Complete

Make sure you know what tax forms you must file to keep your business compliant. Double-check that you paid your estimated taxes due for this year. You may be liable for federal, state, local, and sales taxes.

Federal Income Tax and Employment Forms

When you set up your business, you decide whether your business entity is a sole proprietorship, corporation, limited liability company (LLC), etc. Your business structure determines what federal business income tax forms you file. Additionally, if you hire employees or use independent contractors, you must file the following:

  • Form W2 form for employees and summary W3 form.
  • Form 1099-NEC (Non-Employment Income) for contractors and summary form 1096.
  • Form 940 (for annual payroll returns) or Form 941 (for quarterly payroll returns).

State Income Tax and Employment Forms

Also, check with your state about business income and employment tax returns you must file in the next tax season.

Sales and Use Annual Taxes

If you have a seller's permit, you may need to file an annual or quarterly return depending on the number of sales you make each year or the yearly dollar threshold amount. For example, in some jurisdictions, you only need to file if you have over 200 transactions per year or over $200,000 in annual sales.

Pay Franchise Taxes or File Reports

A franchise tax is something of a misnomer - you do not have to own a franchise to have to pay a franchise tax. If you have any business entity such as a corporation, limited liability company (LLC), or partnership, you may have to pay franchise taxes either annually or biennially. You must pay any fees or file reports to keep your business entity in good standing. Otherwise, you may lose the important liability protection a corporation or LLC offers. Some states send reminders but find your filing deadline and put it on your calendar. Often, the filings can be done online through the Secretary of State's Office.

Renew Business Licenses and Permits

Your business may need local business licenses or permits to operate. These may be eligible for renewal at the end of the year or on the anniversary date when the license was issued.

Update Contact Information and Records

Make sure you have your customers' current information. You can send holiday greetings with a way your customers can update their information. If you employ people, have their current addresses on file for tax forms and W2 statements.

Plan Business Goals for Next Year

It is an excellent time to review your business and business planning. What went well this year? What could you improve on? It is important to set goals for next year and break down the steps to reaching your goals. For example, you may want to expand your social media presence as part of a marketing plan. How will you go about it? You may need to seek business financing for growth. What are your options? Evaluate all aspects of your business. Do you need to increase your pricing or staffing needs?

If you have a sole proprietorship, consider forming an LLC to separate your personal assets from your business debts and liabilities.

Plan for the Future

Many small business owners handle most, if not all, of their business activities. So, what happens if something happens to the business owner? Succession planning is critical to business continuation, yet according to Forbes, 58% of business owners do not have a succession plan.

Put estate planning on your to-do list. There are two crucial estate planning documents to consider: a financial power of attorney and a last will and testament. A financial power of attorney allows you to name someone you trust to handle your financial matters if you are incapacitated and unable to do it yourself. This would include the power to manage your business operations. A last will and testament is a legal document in which you can give your business interest to a beneficiary so they can continue the business operations.

Following this checklist will make sure your business stays compliant with tax and business laws, but it will also prepare your business for the coming year.

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