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New Year's Resolutions (and Reconciliations) for Businesses

December 26, 2018 / by Dawn Hershik

New Year's Resolution NotebookIf you run a small business, the holidays can be a distraction. It's easy to lose focus during the rush (if you're in retail) or the lull (if you're not). Either way, this is a crucial time. You need to take stock of where your financials are as this year ends and the next begins.

Don't drop the ball before watching the ball drop in Times Square. As the year ends, resolve to …

Keep good records all year long. Yes, we offered the same advice at this time last year. Did you follow it? And if you didn't, don't you wish you had? Wouldn't it be nice to relax and enjoy some holiday time with family and friends instead of scrambling to pull together 12 months of records?

It's worth repeating: At a minimum, performing monthly reconciliations and keeping accurate, up-to-date records — including all expenses, such as equipment updates or mileage, as well as W-9 and 1099 forms — will make your life (and your bookkeeper's life) much easier at tax time. It will also prepare you for any unexpected audits. Perhaps most important of all, thorough records give you insights into your business that can make it easier to create accurate budgets and forecasts.

Make sure your expectations are reasonable. Statistics show that fewer than one person in 10 actually follows through on his or her New Year's resolutions. That's because most people set the bar too high. They vow to lose 40 pounds instead of just committing to eating less and exercising more.

With a small business, it's easier to set achievable goals (don't call them resolutions). It can be as much a matter of eliminating things that don't work as refining the things that do. And now that you're keeping accurate records and making informed forecasts, you have much more realistic expectations for what your business is likely to achieve in the coming year.

Also, don't think you have to get locked into any of your forecasts, goals or resolutions. By the Fourth of July, you should have made necessary course corrections based on how your actual numbers stack up against your projections — particularly if there have been any disruptive events, like severe weather or a sudden economic downturn.

Include an exit strategy in your forecast. Even if you have no intention of selling your business in the coming year, it's important to plan for that possibility. This is a good way to develop best practices. If you think a prospective buyer would expect to see an employee handbook and privacy policy, for example, then you'd better have them.

It can take up to two years to sell your business. By preparing for that contingency, you get in the habit of planning ahead. And maybe next year, you can enjoy the holiday season instead of lapsing into crisis mode.

Topics: Bookkeeping Services, Business Advice, Small Business Advice, Chicago Far West Suburbs

Dawn Hershik

Written by Dawn Hershik

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