Reflection of the Week
Your 6-Step Checklist To Close The Books On 2024
Happy Friday, all!
This week was a whirlwind of closing out the company’s books, analyzing the info for estimated tax payments, and closing the books on 2024.
If you’re still in the process of cleaning up 2024, I have a guide for you. In the latest MDB episode, I guide you through a six-step process to close out 2024 and set yourself up for success in 2025. You’ll tidy your finances, get a jump start on thinking about taxes, evaluate your business performance, and set strategic goals.
Your Year-End Business Review Checklist
Step 1: Close Out Your Financials
Closing out your financials may sound dry, but it’s imperative to get right.
- Review your books — Review your profit and loss for the year for any discrepancies, outstanding invoices, or payments that need to be paid. Ensure you have the correct categories for your transactions to save you a headache when preparing next year’s tax return.
- Reconcile your accounts — Every month, but especially at the end of the year, you should reconcile your financial accounts, including bank accounts, credit cards, and loans, to reveal unaccounted expenses or hidden fees.
- Analyze your cash flow — Review your cash flow to see what you owe and who owes you. You can also get a clear picture of whether you can defer income to next year or incur more expenses this year to save on taxes.
- Review your payroll — Ensure wags, taxes, and benefits are accurate and that Bonuses are accounted for with proper tax withholding.
Step 2: Evaluate Your Tax Position
Once your financials are in place, it’s time to shift to taxes.
- Consider year-end tax deductions — Incur expenses for purchases like office supplies, software, professional services, and equipment you will have in the coming year.
- Review your retirement contributions — Don’t miss your opportunity to make employee contributions to your Solo 401(k) before the December 31 deadline.
- Plan for next year’s taxes — Project what your tax liability might look like next year, plan for potential quarterly tax payments, and evaluate whether you qualify for tax credits or deductions. Also, start gathering important information for tax forms, such as 1099 NECs and W2s.
Step 3: Reflect On Business Performance
Once the numbers are in order, it’s time to review the past year of business performance and make meaningful adjustments.
- Review key metrics — Identify the key metrics for your business, determine whether or not you hit them, and analyze why or why not.
- Analyze client data — Come up with your ideal client profile, but remember that high paying isn’t the same as high value.
- Employee performance reviews — If you have a team, conduct an annual performance review to acknowledge achievements, identify areas for improvement, and set clear expectations for next year.
Step 4: Refine Your Vision, Mission, and Values
Let’s dig deeper into your mission, vision, and values, which are at the heart of mission-driven businesses.
- Reassess your mission and vision — Ask whether your mission or vision has evolved or shifted, and update your mission and vision statements if necessary.
- Clarify your core values — Just like with your mission and vision, reflect on your core values and update them if necessary.
Step 5: Set Strategic Goals For 2025
After reflecting on the past, let’s look forward by setting achievable, flexible goals.
- Set SMART goals — Aim to set specific, measurable, achievable, relevant, and time-bound goals.
- Break down goals into actionable steps. Know the next and proper steps to make your goals less overwhelming and chart a clear path forward.
- Build in flexibility – The market, economy, and client needs constantly evolve. Build checkpoints into your plan and make course corrections as needed.
Step 6: Tidy Organizational Processes
Don’t overlook the operational side of your business to save yourself headaches and hours in 2025.
- ● Audit your systems and tools — Review the software, apps, and systems you are using, take note of the tools you aren’t using, and automate repetitive tasks.
- ● Organize digital files — Organize digital files in clearly labeled folders to quickly find essential documents.
- ● Review contracts and legal documents – Check that your contracts and legal documents with vendors, clients, and employees are up-to-date and compliant.
Questions of the Week
- What’s the most pressing thing you need to clean up for 2024?
- What information do you need to gather for the cleanup?
- What is the next action you can take to complete the task?
Tool of the Week
This episode is full of step-by-step instructions on how to clean up and close out your business for 2024. If it feels overwhelming, rinse and repeat the questions of the week.