Business owners face long holiday checklists. Not only do they have their personal gift and planning lists, but they also often have business-related lists for holiday cards, client gifts or year-end bonuses. There’s one list, however, that’s paramount to a healthy business, and the end of a year is the ideal time to be sure to check every item on it.
It’s the small business owner’s annual checklist of business and legal documents — the annual review of which can dramatically affect your company’s bottom line. December is an ideal time to review core documents because it’s late enough in the year to provide a good snapshot of your company’s performance while still lending time to address needed changes before a new year begins.
- Financial Statements and Budgets — Begin by updating your balance sheet, income statement and cash flow statement. You can then use these foundational financial documents to analyze earnings ratios, evaluate all the other items on your checklist and ultimately develop a budget for the coming year.
- Year-End Tax Planning — Assess your tax situation to determine whether any action should be taken before year’s end to reduce your liability or adjust for the coming year’s forecast. Review property taxes, capital gains and losses, equipment or real property depreciation and projected income.
- Equipment and Real Estate Leases — Review leases annually not only to determine whether you still have the best financing available but also to understand your legal liability under the lease terms. You also need to understand the risk to your personal assets. The results will help you determine whether to renegotiate, adjust your insurance policies or change your corporate structure.
- Business Insurance — Evaluate premiums, deductibles and past and anticipated needs to determine whether adjustments are in order for the coming year. Oftentimes an annual review will reveal minor adjustments that can have a major impact on your company’s financial performance.
- Employee Benefits Packages — With the increasing cost of benefits to small business owners, it’s always wise to review your offerings on an annual basis. Be careful not only to consider the cost of benefits offered but also their worth to employees. Does your benefits package help you attract and retain valued, skilled employees? Is it competitive with what other employers in your industry offer? Occasionally business owners find that minor modifications (e.g., trading one or two holidays per year for flex time) boost employee morale and satisfaction while also saving money.
- Employment, Customer and Vendor Contracts — It’s especially important to review any contracts that may need to be renewed for the coming year. Check to be sure all parties are in compliance with the contract terms and that the contract itself conforms to any relevant industry regulations. You’ll also want to consider price/cost adjustments that may impact contracted dollar amounts. Factors such as fluctuating gas prices, supply costs and demand may dictate a need for fee adjustments.
The small business owner’s year-end checklist may not be the most fun list you’ll complete this season, but it could be the most profitable. The savings and growth that could result make it worth becoming an annual tradition.
Article by Brandon Prinsen, Johns, Flaherty & Collins Business Attorney in La Crosse WI. For more information on business planning in Wisconsin, contact him at 608-784-5678.