7 Money Moves Businesses Should Make Before The End Of The Year

Written by Marlese Lessing – Edited by Rob Watts – 5 Minute read

December tends to be a whirlwind for businesses as they weather the holiday rush, manage end-of-the-year gatherings and make preparations for the new year. As a result, thinking about the company’s finances tends to slip many owner’s minds.

While it’s easy to get lost in the bustle, setting yourself up for financial success before you flip the calendar is essential to making the next year a good one. Here’s how you can make tax season easier, save money on your loans and get ready to crush the new year.

1. Make sure your tax documents are in order

Don’t give your CPA cause for grief in the new year. Before tax season arrives, get your tax documents and financial statements ready to avoid the last-minute scramble.

Ideally, you shouldn’t be waiting until the end of the year to get your tax documents in order. Unfortunately, for many small businesses, bookkeeping can fall by the wayside during the bustle of the year.

“Make sure you speak to your CPA and be in constant communication, especially towards the end of the year,” says Paul Miller, CPA and founder of accounting firm Miller and Company. “Make sure your books and records are reconciled at least monthly – in the worst case, quarterly.”

The earlier you do this, the more organized you’ll be – and you’ll give yourself a better chance at maximizing your tax deductions and taking advantage of business tax credits.

2. Update your cash flow analysis and projections

Cash flow is critical to your business staying afloat. Knowing what your cash flow is – and where it’s going – is key to checking the pulse of your business and planning out the next year.

“Most entrepreneurs manage their cash flow by looking at the balance in their bank account, and that is not a complete picture of what’s going on in their business,” says Dan Dollevoet, fractional CFO. “If you have a net negative cashflow every month, eventually your business is going to run out of cash and your business will cease to exist.”

Creating a cash flow analysis doesn’t have to be difficult – simply start with a beginning balance, identify the cash coming in (sales, interest payments, and other forms of income) and subtract the cash coming out (debt payments, employee salaries and other expenses).

While it’s a good idea to do this on a regular basis, a year-end cash flow analysis and projection can help you determine what goals you want to achieve in the next year, what your taxes will look like and what the overall financial health of your company is looking like.

3. Set business goals for the next year

Whether you’re just starting out as a new entrepreneur or if you’ve been in the business for some time, setting new goals for your business can help you adapt.

Using your cash flow projections will help inform you where your business trajectory needs to go in the next year – whether it’s making more sales, growing your team, paying down debt or moving to a bigger location.

Ideally, this should be a process you should be something you work on all year as your cash flow changes and as you complete your projections. The end of the year, however, can help you make big-picture decisions based on the previous year’s performance – and, if you haven’t already, get you in the habit of setting new goals.

“Q4 is a good time to look at what you’re doing now compared to what we did last year, and where your business is changing,” Dollevoet says. “There’s limited money and there’s limited resources, so you have to prioritize the things that you need to get done. Identify the three to five big things that need to be done, and then start planning for next year.”

4. Update your cash reserves

Cash reserves are an essential form of insurance for business. Like an emergency fund, cash reserves act as a backup for a variety of circumstances – whether it’s a bad sales month or when a chance to grow springs up.

“It allows you to weather the storm when business does slow down,” Dollevoet says. “It also allows you to take advantage of more desirable opportunities for investment, whether you’re acquiring other companies or purchasing equipment to grow your business.”

While how much you need in your cash reserve will depend on the business, a good rule of thumb is to have three to six months’ worth of expenses on hand, including cash for payroll, operating expenses and debt repayments.

5. Review your customer and client base

Customer retention is crucial to your business. Staying on top of your client list, reviewing your customer activity and keeping in touch with clients can pay off in the long run, and give you a launchpad upon which you can start the new year on the right foot.

For retail businesses, this can involve looking at your overall customer volume, which products/services have had the most draw and what feedback you’ve been receiving – especially from public online reviews, which can heavily influence whether newcomers pay your business a visit.

For client-based businesses, this can involve looking at your top-paying clients and contracts, seeing which client relationships you want to continue pursuing, sending follow-up messages for old sales and, if it’s standard in your industry, sending out client appreciation gifts.

6. Get your accounting processes figured out

Before tax season hits, be sure to be on the same page as your CPA with what they need – and what you can do to make their job simpler.

“I hear horror stories from accountants who get a shoe box of receipts at the end of the year, and then they have to try to reconstruct what happened in the prior year before they even get around to doing the taxes,” Dollevoet says. “Ask your tax professional, How can I make this better for you? How can I be more prepared to give the information that you need to help me?”

While you don’t need to conduct a full audit every month, reviewing your records, organizing your deductible expenses and reconciling your accounts regularly can go a long way to make your account’s life easier – and maximize your business deductions.

“For your small business, every dollar counts, and every deduction counts,” Miller says.

7. Review your loan interest rates

Business loans shouldn’t be set-it-and-forget-it. With the Federal Reserve dropping interest rates in 2024 and projected to continue to drop them through 2025, it could be wise to see if you can lower your monthly payment and pay less interest with a loan refinance.

This is where your cash flow analysis and business goals will come in handy. If you’re looking to refinance for a lower interest rate and payment, you can use your cash flow to determine how much you’re able to afford on the payment.

Having all your tax and cash flow documents in order will also help you when you apply for your loan, which makes the end of the year an ideal time to see if it’s time for a refinance.

Bottom line

Managing the end of the year for your business can be crucial to how the new year shapes up. While the last quarter can be hectic, making sure to have everything organized can majorly help you out in the new year.

By getting your tax and accounting processes in order, bolstering your cash reserves and establishing your game plan for your business into the new year, you can start off January on the right foot and make the next year your best one yet.

This article originally appeared here and was republished with permission.