There is still time left before 2017 wraps up, but planning ahead is the key to ending the year right. To that end, here is your End-of-Year Playbook to help you tie up any loose ends and get a running start as we head into the New Year.
You can’t make any sound financial or tax planning for the future if you don’t know where things stand—and that means understanding actually how much you’ve taken in and how much you’ve spent year to date.
If you are not working with an accountant, there are plenty of apps to help automate most of the work for you. For example, you can take a look at FreshBooks’ expense tracking. By getting caught up on your revenue and expenses now, you will have an easier time come tax season, and you’re in a better position to make sound end-of-year decisions.
Once you understand your business’ financial picture, it’s time to get honest about how things are going. Is your business model sustainable or do you feel like you’re working as hard as you can, but still treading water?
Many freelancers and small business owners make the mistake of undercharging their clients: is your pricing adequately compensating you for your time, experience, and costs (which include taxes, retirement plans, health insurance, and more)?
The start of the New Year is a natural time to bump up your rates. And if you are billing clients by the hour, I also recommend reading FreshBooks’ eBook “Breaking the Time Barrier” to better understand how to put a price tag on your services.
The majority of people think about taxes just once a year. As a result, they lose the chance to make any meaningful changes to help their tax situation. It’s smart to set up a meeting with an accountant before the year comes to a close, so you can follow any tax advice while it still matters for 2017.
For example, if after organizing your books, you realize that you’ll have a larger-than-expected profit this year, consider pulling the trigger on that new computer or other expenses you’ve been considering. And by all means, see where you stand with your estimated tax payments for the year and get caught up if needed.
If you have been thinking about “upgrading” your business structure from a sole proprietorship to an LLC or corporation, now is the time. That’s because you can simplify your record keeping and taxes by starting 2018 as the new structure.
In fact in the U.S., you can even have a document filing company complete the paperwork now, and then send it in to the state office at the start of 2018. Read “Business structure: choose the best one for you” to learn more about the various business structures, and their pros and cons.
Throughout the year you undoubtedly make time to help your clients prosper, but how much time do you dedicate to growing your own business? Is the content on your website and business social media profiles up to date?
Dedicate one day this month to touching up, revamping, or overhauling your digital presence. If you simply can’t spare a full day from billable work, then spend two hours per week for one month. You can even hire someone if needed… just don’t let your own business languish while you help everyone else move ahead.
Maybe you started a dog-walking business before you got serious about your design work. You haven’t walked a dog in ages, but various government agencies may still think that dog-walking business is active (and they’ll be expecting your tax return, annual fee, etc.).
By the end of the year, you should officially close any inactive business. This is particularly true if you incorporated (formed an LLC), filed for a reseller’s license or any other kind of permit. The last thing you want is to find out that you owe three years’ worth of annual fees for a business you assumed was shuttered a long time ago.
Your clients will expect you to take time off around the end of the year; more than likely, they’ll be quiet around the holiday season, too. However, you should still give all clients ample notice of your plans and set their expectations for your availability. Planning ahead is the best way to ensure a smooth and stress-free vacation.
This is an optimized post from the FreshBooks Blog and was originally published in October 2014.