Advice For Organizing and Preparing Your Year-End Financials

With the end of the year inching towards us, it is important to look forward and take stock of the new year, especially by organizing your year-end finances. As a woman entrepreneur, you must plan and prepare for the coming year to avoid any bumps in the future. Follow these tips from the Women’s Business Center of Northern Virginia to stay in control.

Organize receipts for 2021 taxes

If you want to stay on top of your business finances, ensure you keep and organize your tax receipts throughout the whole year. They are one of the key elements of your expense management and must not be neglected. If you have neglected this step, take some time NOW to organize your records. Don’t wait until taxes are due or you will be overwhelmed.

Review Your 2021 Business Plan to Set Up 2022

It’s that time of the year when you must consider how your business can reach greater heights in 2022. So how do you set up your 2022 financial system? Read on to find out:

1.     Identify your assumptions and biases from 2021 and determine what worked and what did not.
2.     Analyze your results for the year and figure out how you can maintain or improve them.
3. Set the foundation with some realistic projections that include unforeseen circumstances as well as best and worst-case scenarios. Apply what you learned in 2021.

Develop Cash Flow Projections for 2022

Forecasting your cash flow for the coming year will give you the power to track or predict cash movements in the future. You can also identify shortfalls and cash crunches before they take place. Follow these simple steps to conduct your cash flow projection:

1.     Determine the time period you are forecasting for (1, 2, 3 years?)
2.     List out all your income including sales, tax refunds, grants, license fees and the like
3.     List your outgoing costs such as salaries, rent, bank loans, assets and more.
4.     Calculate the running cash flow

Compare years: look for trends, differences and more

Trend analysis involves the analysis of data over a period of time to understand and identify consistent patterns and trends. Comparing trends over years can help you understand how your business has done in the past and how it is likely to fare in the future. Trend analysis helps in three main ways:

1.     Duplicate well-performing trends and actions for business success
2.     Identify trends that make the business perform poorly and eliminate.
3.     Use tangible evidence to make informed business decisions

For more information on understanding small business taxes, watch our webinar here. You can also review the IRS Small Business and Self-Employed Tax Center to get a better understanding of your taxes. The Women’s Business Center of Northern Virginia also recommends reading up on your federal, state and local tax obligations to stay compliant. Check out upcoming trainings at https://cbponline.org/classes-counseling/class/all-classes/  The WBC can also help you prepare your cashflow projections.  Request a free, confidential counseling session at www.cbponline.org/counseling