New Year’s accounting resolutions
Small Business Guides
7 min read
The beginning of the year is a great time to reflect on the past twelve months and prepare for the next. Here are some useful accounting tips to help you get your business finances up-to-date and ready for the year.
Keep your business in shape
People often make New Year's resolutions to live a healthier life. For example, they might resolve to change their diet, exercise more often, or cut down on alcohol.
You can make the same sort of resolutions for your business, to help it stay in top shape for the coming year. Since money matters to your business, it makes good sense to look at its overall financial health and see where you can make improvements.
Here are 10 tips that will help you understand what you've achieved in the past year – and what you might be able to achieve in the next. Some you can put into action right now. Others can become resolutions to help your business grow in the new year.
1. Review your financials
It may not be the financial year end for your business yet. But it doesn't hurt to go through all those sales receipts and invoices now, and check your bank account to make sure the figures add up.
Quality accounting software makes this easy for you – and does most of the work automatically.
2. Talk to your accountant
One good reason for getting your accounts in order now is so you can share them with your accountant for checking.
Some accountants might not want to look at the detailed figures until nearer the end of the financial year. But if you can persuade them to take a quick look now, they may be able to give you a rough idea of what your tax bill will be.
It's good to have that knowledge sooner rather than later. That way you can ensure you save the right amount of money and avoid any unpleasant surprises.
3. Review growth, revenue and sales goals
Take some time to reflect on the past year and ask yourself some important questions:
- Did your business grow?
- How did your revenues and profits compare with the previous year?
- Are you sales trending up? Take a look at the sales graphs in your accounting software to see.
- Does your expenditure over the past 12 months give any cause for concern?
- If you made a list of goals last year, did you achieve them?
In short, try to understand how your business has changed since the end of the previous year. If it's grown, give yourself a pat on the back – and keep going.
If business hasn’t improved, ask yourself why, and dig into the figures to find out more. Now might be a good time to get professional advice from an accountant. They can help with the coming years financial planning. This will help you get on the right track.
4. Stay up-to-date with tax law and filing deadlines
Tax laws and codes change on a regular basis. Talk to your accountant to make sure you're up-to-date, and understand how any changes affect your business.
Ask them when you’ll need to file and pay taxes. Set up your calendar with the appropriate alerts and reminders for the coming year.
5. Update your payroll
Be sure to update your internal systems, such as online payroll. With the right software this will be easy to do. Items to consider include:
- Handing out bonuses
Check local legislation – you can probably pay bonuses now instead of waiting for the end of the tax year. It might help your tax accounting to do it sooner rather than later.
- Pay employees electronically
Pay your employees by direct deposit to save everyone time, money and resources.
- Reviewing employee status
Make sure you know the difference between an employee and an independent contractor or consultant. Check the status of all your employees. If you get this wrong it will cost you money – and you may be penalized by the government.
6. Get your accounting software up-to-date
It's hard to take a step back and evaluate your accounting software when you're busy using it on a daily basis. So a quieter period of the year is a good time to consider whether it’s working for you.
If you're using traditional desktop accounting software or Excel spreadsheets, think about the benefits of moving to online accounting. Online accounting makes it easy to access your business accounts from anywhere, at any time, using a laptop, tablet or smartphone.
You'll also reduce your IT costs, because software maintenance and upgrades are handled for you. And online or cloud accounting is secure, with powerful encryption and remote backups. So there's less chance of your vital business information being lost or stolen.
Do your research, find out which accounting software might be suitable, then try it out. Most software packages have free trials so you can see whether the product is right for you and your business.
Since money matters to your business, it makes good sense to look at its overall financial health and see where you can make improvements.
7. List your goals for the coming year
It's important to wind down and give yourself a break from work at least once a year. Taking time off to spend with family and friends will help you recharge, ready for the coming year.
It can also help you get a broader perspective on your business. When you're not concentrating on day-to-day tasks, you're free to think outside the box. Some of the best business development ideas happen when you’re relaxed. So kick back, and switch out of work mode for awhile. You and your business will benefit.
Make a shortlist of your main business goals for the year and put them somewhere you can see them. These might include sales targets, revenue figures, opening new stores, taking on more staff, or improving business relationships with existing clients.
Try to set yourself some goals you know you can achieve. Work towards these during the year and check them each month to remind yourself where you're going.
8. Keep your accounts in mind
A well-run business has well-managed accounts. With the right financial tools, you'll be aware of the financial well-being of your business at any time. This will help you make the right decisions – not just daily ones, but long-term strategic ones too.
9. Check in with and survey customers; do a year-in-review
Getting feedback from your customers is a great way to improve your product or service. Here are some examples of questions you could ask them:
- What could we do better or differently?
- What are the three main things we do well?
- Why did you decide to use our services or product in the first place?
- Would you recommend our product or service? (you can turn this into a NetPromoter survey).
Consider sharing your findings with your key customers – and tell them how you plan to improve your offerings.
10. Track your finances efficiently
Learn from the past year and figure out how you can track your finances more efficiently in the coming year. Examine how you currently handle your money:
- Is it time you kept a digital copy of your receipts? Taking a photo of them means you can store them in your accounting software.
- Do you need to get a separate credit card for your business expenses? Many small businesses use the same card for both business and personal expenses which complicates matters.
- Do you need to have a separate bank account for business and personal money so it isn’t mixed in together?
Finally, always keep track of money coming in (payments from your customers) and money going out (your costs). For many small businesses the cost of staff is one of your highest costs, so make sure you examine employment costs and the output of your employees carefully.
If you only make one business-related new year's resolution this year, make one that counts. Resolve to manage your accounts well and plan your business finances carefully.
Get help from an accountant or financial advisor if you need to, so you can map out a financial plan. And make use of smart accounting tools to help you keep tabs on the money flowing into and out of your business.
If you can stick to this resolution, your business is likely to keep growing throughout the coming year.