For many of us, summer is break time. The kids are out of school, and we find ways to squeeze some travel in among the regular work routines. Mid-year means that year-end is months away, and there is nothing to worry about, right?
Mid-Year Preparation for Year-End
Year-end will be here in the blink of an eye, and before we know it we will end up feeling behind again. Here are five things you can do this summer that will save you time, energy, and stress this holiday season. Best to be prepared and ahead of the game than behind and stressed-out.
1. Schedule an appointment with your accounting professional(s).
If it’s been more than 3 months since you last saw your bookkeeper or management accountant, you’re overdue for a check in. Bookkeeping professionals today are more than just data-entry and systems wizards; we are business advisors. Mid-year is the perfect time to check in and make sure that you’re staying on top of everything. This valuable member of your team needs to stay in the loop on the changes going on in your life and your business. Together you can ensure that you are staying ahead of the game and preparing for what is coming next.
If you haven’t seen your tax accountant since you filed your last return (or if you haven’t yet filed the prior year return), it’s time to schedule a meeting. Mid-year is the perfect time to update your tax preparer on the status of your income. Your tax accountant will be able to tell you if you are putting away enough or too much for taxes in your quarterly tax payments or regular payroll deductions. Not enough, and you could have an unwelcome surprise come next tax season. Too much and that can impede the cash flow that your business needs for operations or growth.
2. Make sure you have updated W-9’s for all of your vendors.
The W-9 is the form that the IRS provides for us to collect tax identification numbers and contact information for our vendors. It is important to keep this information up to date so that you and your accounting pros have what you need to file your 1099 forms in January. Having to scramble at year-end to collect this information can be a big stress, and we can’t assume that the forms we have from the prior year are still correct. A lot can change very quickly! A vendor could have moved addresses or even incorporated since the last time you requested their information.
It’s best to request a completed W-9 from each vendor before you send them their first payment each year. If you’ve fallen behind in this habit, mid-year is a great time to get caught up and make sure you have all of the details you need. Be sure to check out this article, this article, and this article by other fantastic columnists here on Between Wall and Main for more great educational information on 1099’s and W-9’s.
3. Count your inventory.
If you haven’t counted your inventory since your year-end count, it’s high time for an update. Inventory errors can snowball quickly if left unchecked, and the longer they go unnoticed, the harder it can be to pin-point how they happened. Regular inventory counts not only keep your books on track. They also help you to make more effective ordering decisions, minimize loss and damage, as well as keep an eye out for employee theft of products. If you want some great tips on how to take a physical inventory count, click here.
4. Keep your books up to date, and review your reports regularly.
Be sure to run your Profit & Loss report by month so that you can review the trends, and look at it with a comparison to the prior year. Make sure to point out any questions or outliers to your accounting professional, or look into them yourself to ensure that everything is categorized correctly. This will save you a lot of time during the busy holiday season, right before 1099’s and W-2’s need to be sent out in January.
Run your balance sheet report, and make sure that the balances of all accounts are correct, particularly the payroll liabilities. Make sure the totals on your Accounts Receivable Aging and Accounts Payable Aging reports match the balance of those accounts on your accrual basis Balance Sheet. Then review the customers and vendors who have balances to make sure there is nothing past due. Summer is a great time to catch up on collections. If any of this is Greek to you, see #1 on this list. That’s why you have team members who love this stuff!
5. Update your business plan.
Are you driving your business by looking through the windshield, or are you focused on the rear-view mirror? Perhaps you’re not even looking, and you’re just flying by the seat of your pants. Failing to plan is planning to fail. Mid-year is the perfect time to realign your actions with your core intentions, set some goals, and review what you have accomplished so far this year. If you’re not sure where to begin, revisit #1 in this article. Your accounting professionals are some of the best people to have strategy conversations with. If your accounting professional doesn’t offer strategy services, it’s time to find one that does.
LivePlan is a great tool for regular, ongoing business planning at strategy. Check out their fantastic blog for some great tips and tools!
Pat yourself on the back
It’s important to appreciate the warm weather, take time with family, and recharge our batteries. Just make sure to also stay on top of your business’s big picture. The holidays will be here before we know it, so click here to learn about some things that you and your accountant can do to begin preparing for year-end.