December is tough for many small businesses. Income tends to decrease, expenses skyrocket and employee productivity dips. However, you can take advantage of an otherwise “slow” month and set your business up for a great new year (and tax season) by taking the following steps.
Schedule Weekly Team Meetings
To keep your team members focused when the holidays are in the air (or on the radio), you need to be proactive and increase communication with your team. If you are not setting team meetings already, now is the time to start. If you already have weekly meetings in place, then consider setting individual or team goals with your team to accomplish on a weekly basis. Having your team members commit to hitting a goal by a certain date will keep them focused in the short term. Holding them accountable for their progress at the team meeting the next week will ensure strong performance, and increased team performance might encourage you to continue this practice into the New Year.
Clean Out Your Contacts List
If you send out holiday cards to everyone on your list in early December, you will be getting back a percentage of the cards as undeliverable. Use this as an opportunity to clean up your contact list. The cost of your card, including postage is likely not cheap. If you do not clean your list, you will be sending out cards again next year that have nowhere to go.
Keep Tabs of Your End-of-Year Expenses
December’s heightened expenses will not be as painful if you are sure to claim your deduction when appropriate. The holiday cards that go out to past clients and referral sources are a marketing expense. Referral gives (up to $25) are deductible in the eyes of the IRS. And that holiday party that you throw for your employees every year? If it’s primarily for the benefit of your employees (and not your family or friends), then it will likely qualify to be a 100% deductible expense. This is twice as nice as the 50% “meals and expenses” deduction.
Of course, you should always check with your tax professional, beforehand. This should be easy in December, because your accountant will probably be in the midst of a slow month, as well.
Contact Your Accountant Now to Get Ready for Tax Season
Your accountant or tax professional’s slow period will not last long, however. In January, they will be off and running; getting tax returns ready for other customers, by April. But in December, your tax professional is all yours. Be proactive and begin tax planning for the next tax season. Take the time to review your chart of accounts and profit loss statements with your accountant, to make sure you are getting the best possible information. If you don’t have access to monthly financial statements (balance sheet, profit/loss, cash flow statement), you probably should get it. This is especially true if you are using FreshBooks. Remember, your financial statements show what has happened in the past. The quicker you can get these statements, the quicker you can recognize problems and take action in your business. Have your financials in order by the end of December so you can budget for the next year before the New Year.
Start Budgeting for Next Year
Finally, December is the prime time to set your budget for the next year. If you’re feeling the December cash flow crunch, it is because you did not budget appropriately last year. To create your budget, you need to take your financials and determine your predicted income for the next year. When in doubt, be conservative on the income predictions. You need to determine your fixed costs for the coming year. Next, estimate your variable expenses and one-time costs. Now, with a budget in hand, you can track your business on a monthly basis against your budget. You will know whether you are in the red or in the black. And if you are trending in the black for the majority of the next year, you will feel great heading into next December without a cash crunch.
About the author: Christian Denmon of Denmon & Denmon Trial Lawyers contributed content for this article.