New year is the time for celebration and resolutions but for a business owner it's also time for analyzing the profits and losses for the past year and planning for the future growth. This post should help you prepare for the tax season and get your planning off to a good start.
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1. Get your records in order
If you have an accountant, just ask them for advice. But for every solo business owner, whether you've been plugging in every receipt in Excel or Quickbooks all year long or just kept stashing them in your purse, desk etc, now is the time to get them all recorded and filed away.
If you've been "bad", this may be a daunting task but you need to just get on with it and do it. It may also be something to plan for next year - get that fresh spreadsheet going while updating the old one and plug in the receipts as you get them in the future.
Keeping all of your receipts is important. If you ever get audited by the IRS or your local government, they'll want to see them. I keep mine in several files labeled: post office, supplies, office supplies, meals & travel, promotion and other. I plug them in the computer about twice a week and file to the back by dates. But any kind of organization will work.
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It is also helpful to keep separate bank accounts for your business and personal affairs. If you don't have one, here's another thing to put on your to do list for January.
2. Evaluate last year
During this evaluation you should evaluate your financial position as well as your past goals.
The financial documents you want to generate and evaluate are the balance sheet, the income statement and the cash flow statement. Quickbooks will do it for you and if you're very small like myself and using Excel a couple formulas will help you figure out the things that the 3 fancy accounting reports show: where you're standing financially, if you were profitable and how much funds you have on hand.
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If you do plan to get bigger though (and which entrepreneur doesn't?!) you will have to get familiar with those financial documents and how to analyze them. If you find yourself too "artsy" for that or not all that great at math, you may want to consider hiring an account. It's important to have a clear understanding whether you're at least making it even.
Once you know where your business is standing financially, you should take the time to figure out how it got here. Pull out your business plan or a little notebook with goals in my case that you created a year ago and review how you did. Make notes as you go about both: successful and unsuccessful results. They'll help you in the next step.
3. Plan for the new year
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3. Plan for the new year
I usually start this step with getting a new notebook. Go back check your notes, look at past successes and failures and start planning for the new year. Set new goals - you could be going for a certain $ amount or maybe a number of sales per day, week, month, etc. Create action plan on how you're going to get there, e.g., you may want to make new items, make more items, add a new product line, redo pictures, redo tags and banners in your store, maybe start doing craft shows next year or advertising in a new way, etc. And finally get going and put it all in motion!
Good luck to you, your business and Happy New Year!!!
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