Year-end is coming up faster than you think since it is already the middle of October! I have three tips for you to be thinking about as you plan for your year end. These are things you can be doing right now to prepare your finances for year-end.
#1 Get Your Bookkeeping Up to Date
It’s been a really busy year and maybe you have been putting your bookkeeping off. It’s not the most exciting task for your business, but NOW is the time to get it caught up!
To get caught up right now I recommend you start doing September’s bookkeeping or if you are reading this later, just work on the most current month. In November, do the October bookkeeping and in December, do in November bookkeeping. Get yourself to build the monthly habit.
Let’s say you haven’t done any bookkeeping yet in 2022. You have January through August (September was taken into account above) to do. In addition to doing the previous month, I want you to try to do one month per week for the rest of the year to get all the January-August bookkeeping done. Since there are some holidays coming up like Thanksgiving, Christmas, and New Year’s, you will want to plan around them.
Plan the weeks you are going to do bookkeeping on the calendar. It is very important that you get it done before the end of the year. If you don’t, you are going to pay your tax preparer more to get your taxes done. If you need help getting caught up, you can contact us here to learn more about our bookkeeping services.
#2 Talk to Your Tax Preparer at the End of the Third Quarter or the Beginning of the Fourth Quarter
This is something you need to be doing right now if you haven’t already! We always recommend to our clients and every business owner to talk to their tax preparer at the end of the third quarter or the beginning of the fourth quarter.
Do this when your bookkeeping is up to date, so they can look at your financial statements and give you a projection of what your tax bill is going to be. They can also tell you if you will be getting a tax refund. That would be really good news to have right now.
The earlier you know this information the better. After all, if you’re going to owe money, you have the rest of the year to save that money up. If you haven’t already been saving, or you haven’t been saving enough, we can make adjustments and get you on track.
When your tax preparer gives you an estimate in April, that’s based on what they think is going to happen. So, take your financial records to your tax preparer and have a conversation with them about what they really think your tax bill is going to be based on the actual results you have had in 2022.
This is also a good time to talk to your tax preparer if your revenue has significantly increased this year. If that happened to you, now is the time to consider becoming an S Corp. It can be beneficial to change from an LLC to or sole proprietor, depending on the numbers.
This designation requires you to pay yourself via payroll. (You cannot pay yourself via payroll if you are in a partnership, an LLC, or a sole proprietor.) If you haven’t been doing this yet in 2022, now’s the time to start and talk with us or your tax preparer. You might need to do some catchup payments as well.
#3 Set Your 2023 Revenue Goals
We all definitely need to be setting 2023 revenue goals right now. This is the time to look at what 2022 was like and make reasonable predictions for 2023. Set those revenue goals and then start to reverse engineer all of the things you need to do to hit those revenue goals.
I always start with the revenue as my goal and then say, “Okay, that means I can pay myself this.” Or maybe you start with your pay as your goal and reverse engineer it into your revenue.
How many new clients or customers do I need to reach those goals? How much marketing should I then be doing to generate those new clients or customers?
Take the time in the fourth quarter of 2022 to be the CEO of your business and set those goals. Then reverse engineer to get all of those quarterly and monthly goals for 2023.
These are the three things I suggest you work on for the rest of 2022 to end the year on a positive note and to make sure 2023 is as close to what you plan for as possible. Obviously, we have to readjust when things happen, as 2022 has taught us. But we can only adjust if we have a plan in the first place. If you don’t have a plan, you are flying by the seat of your pants and that can be stressful.
If you are struggling with ways to end your year in a good way and start 2022 strong, contact us today. We can catch up on your bookkeeping for you, so you never have these struggles again in the future.