The final quarter of the year is a pivotal time for businesses.

Beyond wrapping up deals and pushing to meet annual revenue targets, many organizations are also gearing up for tax season, setting plans for the upcoming year, and finalizing next year’s budget.

While forward-thinking is essential for everyone on your team, common pitfalls can derail progress or leave you scrambling at the start of the new year.

To stay ahead, here are five critical tips for building a robust end-of-year financial checklist and avoiding unnecessary stress when January arrives.

1. Prioritize Annual Planning and Budgeting

In a startup’s early days, budgeting is typically a founder-driven process. However, as the company scales, the responsibility gradually shifts to department leaders who manage assigned budgets. This evolution requires founders to delegate more planning responsibilities to their teams. 

As the year winds down, focusing on strategic planning for the year ahead is crucial. Don’t delay your annual budgeting and forecasting process. Starting early will ensure your team has the time and resources to develop a robust plan that drives business growth. 

2. The Importance of Closing the Books

Closing your books monthly is a proactive step that can save you time and stress, especially as the year-end approaches. By staying on top of your bookkeeping, you’ll be better prepared for tax season and avoid pitfalls.

Here are some key benefits of timely bookkeeping:

• Accurate Financial Reporting: Gain real-time insights into your business’s financial health.
• Streamlined Tax Preparation: Simplify the tax filing process by having organized records.
• Improved Decision-Making: Make informed decisions based on accurate financial data.

Maintain Open Communication with Your Tax Preparer:

By working closely with your tax preparer throughout the year, you can:

Ensure a smoother and more efficient tax filing process.

Identify potential tax savings opportunities.

Address tax-related questions and concerns proactively. Get your books in order before the last minute. Prioritize timely bookkeeping and open communication with your tax preparer to set yourself up for success.

3. Avoid Sending W-2 and 1099 Forms Too Early

Timing is critical when distributing W-2 forms to employees and filing 1099 forms for vendors, contractors, and freelancers. Aim to send these documents around January 20th.

Sending tax forms too early can lead to complications if updates or corrections are needed, creating additional work for you or your HR team and requiring amended filings with the IRS.

Additionally, employers are not required to send 1099 forms to international contractors.

4. Effective Communication of Workplace Changes

When implementing new workplace policies or benefit changes, effective communication is paramount. Take the time to:

• Carefully consider the impact of changes.
• Gather feedback from employees.
• Develop a clear and concise communication plan.
• Communicate changes in a timely and transparent manner.

You can foster trust, minimize confusion, and ensure a smooth transition by giving employees ample time to understand and adjust to new policies.    

5. Maintain Accurate Payroll and Tax Records

Ensuring accurate payroll and tax records is crucial for compliance and employee satisfaction. By keeping your systems up-to-date, you can:

• Avoid costly errors and penalties.
• Prevent employee confusion and frustration.
• Maintain a positive employer-employee relationship.

Review and update employee information regularly, including addresses, tax withholding preferences, and emergency contacts. This will help ensure accurate tax calculations and timely payments.

Conclusion

Balancing budgeting, forecasting, and tax preparation at year-end can be overwhelming, but with the proper guidance and timely action, you can set your business up for success.

Huckabee CPA specializes in delivering trusted accounting, CFO, and tax services tailored for startups and small businesses. With thousands of companies relying on us, we help businesses grow sustainably and streamline their operations. Contact Huckabee CPA today for expert support to confidently navigate your year-end financial priorities.