Small business owners often use the new year as a time to plan annual budgets and focus on sales growth and new business opportunities. It’s also a great time to make resolutions to review accounting practices and financial controls on the business.
To make the most of your annual accounting review, here are the seven steps you should take to prepare:
- Review year end financial statements and compare results to company’s previous performance. What has changed? Examine financials each month, but it’s important to look at trends over the year. Ask your accountant to review the information as well. Get a second opinion on the financial health of the business.
- Project cash flow for the upcoming months. This provides a road map for you to plan for upcoming business expenses, and helps you forecast sales and revenue. Forward a copy of your cash flow report to your accountant for review prior to the meeting.
- Review pricing strategies. One way to improve profit is to increase prices for your goods or services, however it could also cause significant loss of customers. An accountant might provide valuable insight into your current strategies and other factors to improve the company’s profitability.
- Inquire about changes in state, local and federal tax laws that will affect the business.
- Review accounting software packages . During this meeting, take the time to inquire about your accounting software. Is it time to upgrade to a new version of the software? Has your company outgrown its current marketing practices? Without asking this question, you’ll never know.
- Consider applying for a line of credit or changing merchant accounts. As a business owner you must prepare for emergencies, especially in uncertain times. While your company might not need access to a line of credit right now, it could in the future. It is easiest to establish credit when the business is not under duress, and your accountant might have a personal relationship with a banker that you should take advantage of.
- Is there anything else? Ask this open-ended question to your accountant. They might be able to give some insight you would have missed otherwise.