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End of Year Small Business Financial Checklist
The end of the year is a great time to review your finances and make sure that you are ready for the upcoming year. Here is a checklist of things to do in order to get your finances in order:
Review your budget and make changes as needed
In order to get your finances in order, it is important to review your budget and make changes as needed:
- When looking at your budget, you will want to consider the following things:
- How much money comes (income) and goes out (expenses) in each month
- What kind of spending habits you have, and whether you are saving enough for retirement.
If there are any problems with these areas that need fixing, then now is the time to do so! To start this process off on the right foot, here are some questions that may help you figure out where any problems:
- How often do I spend the same amount or more than my monthly income?
- Do I save anything every month?
- What can I do to save more money?
- Do I usually stick to my budget?
- If not, what changes could I make to stick to it more frequently?
Make a list of financial goals for the upcoming year.
This is a good time to think about what you want your financial goals to be for the coming year:
- Do you want to increase your cash flow?
- Want to find ways of making your retirement happen faster?
Figuring out your goals and putting them on paper can help keep you motivated, especially when it feels like nothing is going right. Start by making a list of 3 things that would make your business life better or easier:
- I want to save $20,000 this year
- I want my emergency fund account balance to reach at least $10,000
- I would like my investments (stocks/ETFs/mutual funds) to earn an 8%
Review your debt situation and create a plan to pay off debt.
It is important to review your debt situation and create a plan to pay off debt. If you have any, it can help to know what the interest rates are on the loans you currently have. This will give you an idea of how much money you could save by paying off those debts as soon as possible.
It is also wise to consider whether there are ways you might merge your loans in order to lower your monthly payments and make it easier for yourself financially. Debt consolidation has many benefits:
- Reduces the number of payments needed each month
- Lowers your total monthly payment amount (sometimes significantly), and
- May reduce the time over which repayment occurs.
- Create a savings plan and make sure you are on track to meet your goals.
Now that you have reviewed your budget and are on the right path to meet your goals, let’s talk about saving money.
Make Sure You Have an Emergency Fund Saved Up
The end of the year is a good time to make sure that you are on track with your savings plans for 2022. This includes making sure that you have an emergency fund saved up. An emergency fund is a sum of money that you save for those times when unexpected expenses arise or your income falls short. In order to decide how much money to save, consider:
- What are the three most likely things to happen?
- How could each one affect my income?
- How long would it take me to recover from each of these scenarios?
- What is the likelihood that each of these scenarios will happen next year?
- Do I have enough money set aside to cover all three possibilities?
Check your credit score and make sure there are no errors
To start the New Year off right, it’s important to clean up any credit blemishes and errors. A credit check can help you identify problems on your report so that you can take action before they impact your score even more. Some of the most common mistakes include:
- Late payments or missed payments
- Collection accounts or liens
- Outstanding balances on revolving accounts, such as credit cards, installment loans or commercial loan.
By reviewing your credit report for inaccuracies, you can avoid being surprised by your low score and make strides to improve it before the New Year.
Make a plan for income taxes and be aware of any changes in the tax code
It’s time to create a plan for taxes, especially if you want to take advantage of the recent changes in the tax code.
Why? Because Congress has made major changes to the tax code this year; they designed the new tax legislation with the average taxpayers in mind—not just high-income earners—some people might be eligible for deductions they weren’t before. But there are also some pitfalls that could cost you more money come April 15th.
Remember, it’s never too late to plan for next year! If you have questions or want help with any of these tasks, we are ready to partner with you in order to create a sound financial strategy that gets your finances organized before 2022 rolls around:
Are you in search of a decent tax preparer in Texas?
Let’s collaborate to help your business thrive. We’re here to help you overcome any tax difficulties that are presently restricting or slowing down your company’s progress!