Yes, It's Not Even Thanksgiving Yet, But It's Not Too Early for Your Company to Sing 'Auld Lang Syne'
The holiday season is just around the corner, which means a mad end-of-year-dash for many small business owners and entrepreneurs. And no, I’m not just talking about braving the Black Friday crowds for the best shopping deals. Right now is the time of year when our businesses often need the most attention for tax preparation, government compliance and end-of-year administrative housekeeping.
Unfortunately it’s also the time of year when we have our hands full with holiday commitments.
While it’s tempting to push to-do list items into January, doing so could cause your business to miss out on benefits like tax savings. Worse, delaying essential administrative tasks like account reconciliation or data backups could leave your business vulnerable to external threats. From accounting to HR compliance, the following end-of-year essentials are not to be missed.
1. Get organized.
Let’s be honest: Many of us have a drawer or filing folder stuffed with notices from local and state government entities. With the day-to-day stress we experience managing clients and growing a business, it’s easy to miss business-license and registration deadlines, local tax due dates and even personal tax liabilities, like property assessments or vehicle registration renewals.
But help is out there: The app Gov2Go from the technology company NIC makes it easy to get organized, by tracking all your government interactions from a single platform so you never miss another deadline or payment.
The app will ask a few questions and then set up your profile based on your current government interactions. Gov2Go will then notify you when renewals or payments are due. You can complete the transactions entirely on the Gov2Go platform. The app covers federal government interactions as well as offering an expanded library of state and local services for residents, in particular those in Arkansas, Colorado, and Nebraska, with more states to be added in the future.
Gov2Go is a device-neutral platform, so the personal assistant will work from your desktop, mobile device and even voice-command devices like Amazon Echo. That’s right: Paying your taxes could one day be as simple as saying, “Alexa, schedule my estimated quarterly tax payment.”
2. Reduce your tax burden.
Speaking of taxes, does your business follow the cash accounting method? If it does, you don’t pay income on taxes until you receive the payment and you won’t be able to deduct expenses until a payment is made.
That's why a little strategic planning now could save you some extra cash on next year’s taxes. For example, if you plan on purchasing a new computer for your business in the next six months, buying one before the end of the year would allow you to take a tax deduction sooner. You could also reduce your income tax liability by letting clients know they can wait until January to make payments. Alternatively, if you anticipate your business being more profitable in the coming year, you may wish to follow the opposite approach: Defer deductible expenses until next year and accelerate revenues.
3. Give back to your community with charitable contributions.
The holidays are a time to give thanks for life’s many blessings and pay these blessings forward. In addition to any personal donations you and your family make, consider how your small business can make a charitable contribution. Contributions made before December 31 can be used to reduce your current year’s tax burden.
Your donation does not have to be monetary to make an impact. For example, you could reach out to local nonprofits and see if they have a need for gently used office equipment, technology or office supplies you may already have on hand. You’ll help support valuable community organizations by reducing their operating expenses and your business will also benefit from a tax deduction.
4. Reconcile accounts receivable.
Before you can plan for next year, you need to know where your business stands financially this year. Now is the time to run standard reports like a profit/loss statement, balance sheet and cash-flow statement.
You should also take a closer look at your accounts receivable. Consider which clients still owe your business money. If you’re looking to reduce your tax burden, you might allow these clients to delay payment until January, as previously noted. If you’re short on funds for needed purchases or employee bonuses, however, now is the time to remind clients about payment deadlines and any associated late payment fees.
5. Back up your data.
I’ve written before about the rise in ransomware and malware attacks on small businesses. Unfortunately, many small business owners continue to take a lackadaisical approach to cybersecurity that leaves them vulnerable to attack.
With bring-your-own-device culture in full swing, the risk of cyber attacks is rising. Are your systems protected? At the very least, ensure that all of your files, including accounting, client information and projects, service documentation and personnel files are backed up in a secondary location. This could be a cloud storage account that’s separate from your company’s primary cloud service.
You may also wish to provide employees with access to external hard drives so they can have an alternative back-up source for their work computers. I recommend following the “2:1” rule: two digital back-ups in separate locations and one offline copy stored elsewhere.
Before the holiday rush gets into full swing, take time now to position your business for success in the coming year. Whether that means getting organized with an app like Gov2Go or finally backing up those client files, these critical steps can have a major impact on your company's future performance.