It’s that time of the year when people are not just busy preparing for the holidays but making sure they fulfilled their financial obligations. Unfortunately, accounting is a tedious process for most people, whether personal or business. As a result, end-of-year financial requirements are often left untouched until the last minute.
For individuals, starting the year right is always essential. Tackling your daily accounting helps you plan and stay on track with your expenses the whole year. It lets you set your financial goals for the coming year and save money when you get them.
For business owners and operations managers, year-end accounting is a particular task. It is part of the operational and managerial tasks which help you draw a clear direction for your business’s future. Having documentation of your operational reach ensures your business identifies issues and concerns relating to your laid-out financial objectives.
The goal of getting your finances and accounts ready for the incoming year is to have control of your money. Regardless of whether it is for personal or commercial needs, setting your year-end goals is essential in helping you achieve your budgeting goals. In addition, it gives you a good grasp of your financial situation and contributes to the coming year’s overall personal and business outlook.
Getting Your Finances in Shape this Coming Year
The pandemic has almost brought our finances to its knees with the limitations imposed to prevent the virus’ rapid spread. As a result, many people were laid off, and most had to dip into their savings to survive. With most of our savings depleted, starting the new year right is critical to having a healthy financial status the whole year.
Starting the year with a resolution and committing to your plans is a practical way to make the coming year right. In addition, financial experts suggest making a year-end accounting review to polish your finances for the new year.
It pinpoints areas where you have gotten out of control and gives you the motivation to stay committed to your plans and financial goals. Moreover, planning and taking that initial step is critical in maintaining your momentum the whole year.
- Create a budget and financial statement based on your net worth. The road to financial freedom is not easy when you do not know where the tracks are. The first steps to having a systematic approach is to build a road map and stay on track. Divide your budget into three groups — your monthly spending, savings, and wants. The golden rule to a good budgeting framework follows the 50/30/20 budgeting method.
- Manage your debts. To a typical person, debt is unavoidable, mainly if you invest in a long-term asset. However, it only becomes a burden when you cannot control its accumulation. One practical means to avoid being swallowed in debt is to keep the total debt load manageable. For example, maintain your repayment costs at 28%, including your mortgages, credit cards, or auto loans.
- Always have a plan for the unexpected. Investment and finance risks are part of the things you need to consider. A sudden illness, job loss, natural disaster, or death can upend your finances if you are not prepared for such risks. Insurance can protect you against such financial overturn. So purchase insurance coverage to force you to regularly save part of your earnings.
Protecting your finances will give you a sound mindset to face the coming year and start anew. It will bolster your accounting energies and prepare you to leverage your personal growth and empower your income stream and financial portfolio.
Shaping Up Your Business’ Finances Before the New Year Hits
Before the year ends, business owners are required to look back at the health and stability of their accounting. The New Year presents an excellent opportunity to reignite business performance and create positive changes to the whole enterprise.
If you want to make a good start this coming year, you need to know where your business is lagging. A year-end review of your business financial position can help you draw better actions to drive a consistent performance during the coming year.
Additionally, knowing your business finances will affect your marketing approaches to avoid downturns and possible losses. Finally, it allows you to have a clear understanding of your accounting challenges so you can get your business back on a successful track.
- Plan the whole year with a fixed expense rather than a monthly budget.
- Review your business revenue and profit versus the previous year’s performance.
- Leverage your use of technology, including accounting software and cloud-based computing technology.
- Have an early advantage over your business tax requirements by seeking a professional tax planning service.
- Get the help of a professional accountant to understand your accounting numbers better.
- Organize your finances using dedicated accounting software to reconcile and categorize your year-end transaction reports.
- Take advantage of government-imposed tax deductions.
- Control your tax liabilities by planning and checking your business profit and loss.
Also, leveraging your business performance for the coming year means taking time to reflect on the previous year and where it took your business. It will help you ascertain your sales numbers and see whether the trend is taking you upwards or downwards.
Beginning the new year with a clean slate will help you take advantage of opportunities as they come along. Adhering to these tried and tested accounting resolutions can have a powerful impact on your business and the outlook you have envisioned. Making your business reliable means taking advantage of your year-end account review to prepare your new year’s budget and accounting.
Are you looking for help to tackle your account and budgeting goals?
Carefree Bookkeeping can help you get your accounts in order and ready for taxes. In addition, our accounting software can help you create a budget that works for you, your household, or your business. It will help you feel more financially secure and ready to meet your goals or deal with the unexpected in the coming year.