Annual business planning, organizing, maintenance and updates that every small business should take care of once a year to stay on track
Running a business can often leave you feeling like up is down and right is left. There’s so much to do on a daily and weekly basis that it’s easy to let some things slide. However, there are important duties that can’t be left to slip through the cracks — someone’s gotta take charge and get them done. Fortunately, there are many things that don’t have to be done every day (or even every month).
Here are a few things that can (and should be) taken care of once a year.
Organize Financial Records
Collecting and organizing your financial records before the end of the year helps to keep your stress levels low when tax season comes around. If you stay on top of your organization duties throughout the year, this shouldn’t be too difficult. However, if you tend to let things pile up, prepare to set aside a few days to really put things in order.
Here are just some of the things you’ll want to make sure are well-organized:
- Bank statements
- Payable and receivable invoices
- Home office expenses
- Office supply expenses
- Vehicle and mileage expenses
- Marketing expenses
- Tax returns
- Any and all business-related receipts
Since the IRS can can request six years worth of records, it’s recommended to keep most financial records for three to six years. If you are audited, you will need to have the documents they ask for on hand. Things will be a lot easier if you don’t have to rummage through piles of paper to find what they’re looking for.
Put Together Financial Reports
There are three reports you’ll want to pull at the end of each year to get a full picture of your business’ financial health. They are as follows:
- Profit and Loss report (AKA Income statement): Summarizes the revenues, costs, and expenses incurred during the year.
- Balance sheet: A statement of the business’ assets, liabilities, and capital.
- Cash flow statement: Provides data regarding incoming cash (from operations), as well and outgoing cash (payment for business activities and investments) during the year.
These financial reports help you prepare for tax season, set up a detailed budget, and give you the data you need to create realistic goals. To get more bang for your metaphorical buck, construct a financial statement analysis by comparing ratios across these three reports in order to identify trends and find explanations for variances. This will help you make informed decisions regarding investing and expenditures in the future.
Create Your Budget
Rather than being restrictive, small business budgets are actually quite empowering. They arm you with the knowledge you need to stamp out wasteful spending and reach profitability faster. To create a well-planned budget, you will need to pull some figures together. These include:
- Capital expenditures
- Cash flow
Once you have these numbers in hand, you can plug them into your accounting software — or if you do things old school, a spreadsheet — and create your budget.
It’s a good idea to be conservative with projections in case sales goals aren’t met (or are delayed). It’s also advantageous to start your annual budgeting process at the beginning of the fourth quarter to ensure there’s enough time to create a detailed estimate by year-end. Finally, be sure to monitor your budget on a monthly (or weekly) basis so you can make adjustments if circumstances change.
Clean Up Client Files
Go through your vendor and client files and verify that all contact information (names, email, phone number, address, etc.) is up-to-date and accurate. Make sure paper and/or electronic files are properly organized. Take some time to jot down a few notes in each file on the client’s preferences or anything else unique to them. Finally, send them an email or a handwritten note thanking them for choosing to work with you this year.
Backup Your Data
Any data, records, or files that are essential to your business’ operations should be regularly backed up. We’re talking financial statements, customer records, employee records, tax forms — all the stuff you meticulously manage on a daily basis. The best way to go about backing this information up is by using the 3-2-1 backup strategy. It breaks down like this:
- Your local copy (i.e. your primary access).
- A local backup: Immediate access to data that’s been deleted, overwritten, or lost.
- A secure, offsite copy: For times when disaster strikes and your location or equipment has been compromised.
Backups can be kept as physical copies, or digitally on external hard drives or cloud-based software. While you’re taking time to back things up, don’t forget to encrypt your data to keep it safe and secure.
Clean The Office
Dust, dirt, grime, and germs — all can build up in the places you least expect them. Even if you have things regularly taken care of by a service, it’s a good idea to do a deep clean of your office/retail space once a year. Plan a day (or night) to do the deed and ask for employee volunteers. You can sweeten the deal by paying for their time or offering food and drink.
As a small business owner, there are some duties that will always be yours and yours alone. There are also many tasks that can be delegated to others — and delegate you should. As the year progresses, put someone in charge of each of the five aforementioned projects and see if you can’t get them completed quarterly instead of annually. While once a year isn’t bad, four times a year is definitely better.
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