Yearly Finance Checklist

Understanding your cash flow, pricing, taxes, and profitability are all vital to growing your business. Before the year ends, get the numbers straight. Here is a checklist to get a handle on the financial factors of your business.

SET YOUR STRATEGY

• Understand your profit centers. Identify which projects were the most profitable last year. Were they large projects? Small projects? Projects in a certain location or with a certain demographic? Alternatively, what were the least profitable?

• Allocate resources. Delegate marketing funds and staff time to increase the number of similar projects for the next year. Create a plan to address any areas impeding profitability.

• Track success. Set up a system to track whether those initiatives or funds are bringing in more high-profit projects you’re trying to target over the next year. Check progress every quarter.

ADJUST PRICING

• Look at your workload. Consider how many projects you took on this past year. Were you turning down projects because you were too busy? Did you feel overwhelmed with the number of simultaneous projects?

• Think back. Think about whether each client accepted your pricing easily or pushed back when you quoted their job cost. Did they sign the contract quickly? Or did they try to negotiate your pricing down?

• Adjust rates. If you were turning down work because you were too busy or clients did not push back on your pricing, you may want to raise rates. The beginning of the year is a great time to adjust fees.

MINIMIZE TAXABLE INCOME

• Understand your tax burden. Work with an accountant or use tax software to determine what taxes you could owe. If you’ve seen a lot of revenue without many expenses, you may end up paying the government a lot of money.

• Evaluate cash on hand. If you’ve seen a lot of revenue this year, you may have more cash than you need. Identify how much cash you need to run and grow your business next year, and how much cash you have left over.

• Make a needed business purchase. Whether it’s new equipment, additional marketing spend or gifts for clients, using surplus cash on needed business expenses before the end of the year can reduce your taxable income. Be sure to consult an accountant.