Well, it’s December again — the time of last-minute shopping and otherwise preparing for the holidays. (Do you think I’ve done any shopping yet? I’ll leave that to your imagination.)
But as the year winds down, there’s something else you should be thinking about as well: the end of the financial year.
I think this means two things in particular:
- Wrapping up the current year and making sure your records are all in order.
- Looking forward to the new year and creating a fresh vision for 2023.
The Importance of End-of-Year Preparation
For businesses both new and old alike, it’s vital to get your books ready for the end of the year.
If your business is new, this might not feel as important. But if this was your first year in business, then you’re about to have some new experiences that you must prepare for, such as filing your first tax returns. This is a new territory for you, and so it’s all the more important to get your financials in order.
If your business is more established, then it’s tempting to rest on your laurels. You’ve already done this before, after all — possibly many, many times over.
But you must guard against complacency. As businesses get older, it’s easy to slack on your record keeping and miss things that could be costing you money without you even realizing it.
So no matter your level of experience, the end of the year requires a focused effort to make sure everything is in order and ready to start 2023 off strongly.
1. Ensure Your Accounts are Reconciled
First, ensure all of your accounts are reconciled through the end of the year.
This primarily includes your bank accounts and credit cards, but may also include other asset or liability accounts.
It’s important that your accounts reconcile down to the penny. Otherwise you can’t have confidence that you have an accurate picture of the financial health of your business.
In particular, it’s important that you find any unreconciled transactions that have been sitting in your accounts from earlier in the year. If you find any, they could be expenses you entered into QuickBooks but never paid, or checks that were written but never cashed. Those should be followed up, either to be paid or removed from the books.
You should also reconcile your Accounts Receivable and Accounts Payable. This is different from reconciling your bank accounts — you’re not reconciling transactions here, but rather, making sure that your customer balances and vendor balances match up to what you expect them to be.
If there are any invoices that you sent out that haven’t been paid yet, you can make a decision whether to chase down that customer for payment, or simply to write off that invoice.
In QuickBooks Online, you can see which invoices are outstanding by running the “Accounts receivable aging summary” report.
- Under Business Overview, go to Reports
- Under the “Who owes you” section, click the “Accounts receivable aging summary” report
Similarly, make sure you’ve paid all of your outstanding bills. If there are any unpaid bills in QuickBooks, you can check whether you’ve already paid it and just not entered the payment, whether the bill was entered by mistake, or whether you need to actually pay that bill.
In QuickBooks Online, you can run the “Accounts payable aging summary” report to check on which vendors you owe money to. This can be found in the “What you owe” section of Reports.
2. Make Any End-of-Year Adjustments
This is a bit technical and so you might want to leave this to your bookkeeper, but this is also the time to make any end-of-year adjustments.
For instance, if you have any fixed assets on the books, this is the time to make sure to adjust their depreciation for the year. The same goes for any assets that have been sold or fully depreciated this year. Those should be removed from your books.
It’s also a good time to review and adjust the balances of your accruals, such as unpaid taxes or payroll liabilities.
You should also review any prepaid expenses you have and make sure those are being properly accounted for. This can be an area that is easily overlooked, but if you don’t have them accounted for properly, you can be missing out on some deductions and other financial benefits.
Again I know these are a bit technical, so if this isn’t your area of expertise, it’s best to get the help of a bookkeeper. If you don’t yet have one, schedule a free consultation and we can discuss how I can help you wrap up the year.
3. Run Your Financial Reports
Once everything is reconciled and properly adjusted, you can run your financial reports to get an idea of how your business did this year.
You’ll primarily be looking at two reports:
- Profit and Loss (also known as the Income Statement): This report shows how much income your business took in, minus all of your expenses, to tell you your net profit for the year. In QuickBooks Online, you can even run the Profit and Loss with columns for each month, so you can get a more detailed overview of your profit throughout the year.
- Balance Sheet: This report shows all of your assets, liabilities, and equity in your business. This is a good way to get an overall snapshot of the financial health of your business.
It’s a good idea to review these reports to make sure they’re telling the story you expect them to. This is usually done in a meeting with your bookkeeper. It’s helpful to have a bookkeeper who understands your vision, to make sure your financials and vision align.
4. Check Up on Your Vibration
All the practical steps are important, but you also need to check up on how you are feeling, especially once you’ve seen your financial reports, which can shine a light on some uncomfortable truths.
Where is your business compared to where you wanted it to be? Did you make as much profit as you wanted to?
Maybe everything was exactly what you wanted and more. And if so, that’s great!
But if not, you can’t let it discourage you, or else it will threaten to poison your results for the new year.
The most important thing is to accept the results for what they are. What happened, happened, and you can’t change the past.
When you can make peace with your results, you release your resistance, which frees you up to move into a more positive, inspired state. This will allow you to attract the results you desire for the new year.
Instead of seeing where your business maybe fell short, focus on your successes this year. Make a list of at least 5 things that went well for your business this year, and feel truly grateful for each one. This will place you on a more positive footing. Just make sure it is authentic and not contrived.
Preparing for the New Year
Now that 2022 is wrapped up, it’s time to prepare for 2023. This is the time to get clear on what you want for your business in the coming year.
1. Get Clear on the Feeling
As a believer in the law of attraction, I believe the most important step is to focus on how you want your business to feel.
It’s easy to think that success is all about the numbers — how much revenue, how much profit, how many customers, etc. But in truth, the numbers always reflect what is happening on the inside.
So that means it’s important to start from the inside out. We need to start with how you want to feel and go from there.
Do you want to feel more successful? Do you want greater freedom in your business? Maybe you want the acclaim and recognition of having lots of positive reviews from your customers?
Whatever it is you want, just start general. Imagine what it’d feel like if 2023 went as well as it possibly could.
There is no right or wrong here. Anything goes. It’s your business and you get to decide what you want out of it.
2. Clarify Your Vision
As you focus on the feeling, it will get more specific.
Don’t force this to happen, but allow it to develop naturally. The law of attraction guarantees that the feelings you focus on will attract similar thoughts, feelings, and ideas, so focusing on the desired feelings must by necessity result in more specific ideas being attracted to you.
As such, be sure not to rush this process. It might take a few minutes, or a few days. But always be sure it is enjoyable for you.
As the ideas come, you’ll get a sense of what you want to accomplish next year.
- How many customers/clients do you want?
- What are your income and profit goals?
- How much would you like to be able to pay yourself?
- Maybe you want to be able to quit your day job?
Just as before, anything goes.
3. Discover Your Inspiration
But I’m speaking not just of goals, but vision. So while the above is great, you also want to ask yourself the all-important “why?”
Why are you doing this? What do you truly want your business to accomplish next year? No good business is purely about the money or what you get out of it. Behind every successful business, there should be a powerful, inspired vision — something bigger than yourself.
When the inspiration strikes, nothing will be able to stop you from doing whatever it takes to carry it out.
But again, don’t force the vision. Keep an open, curious attitude. What if the “why” was obvious?
In time, the more specific ideas will turn into inspiration. But if you feel any sense of “should” — as in you “should” be inspired or your vision “should” be obvious to you — then you’ll kill that inspiration before it can even start.
So instead, focus on your desired feeling and let the inspiration come in its own time. Trust the process and allow it to come naturally.
I often call this process “percolating”. When you focus on the desired feeling regularly and then leave it rest, each time it becomes a bit clearer until the vision takes shape.
It’s like planting a seed and nurturing it until it finally sprouts. For a long time you may not have a clear picture of what it’ll become, but you know the whole time that it will eventually grow into what it was meant to be.
Don’t worry if the vision doesn’t become clear for a while. sometimes it takes time, plus additional life experience, before the vision clarifies fully.
4. Ensure Your Financials Support Your Vision
Now you want to set yourself up for success.
Just as you made sure your books were accurate for the end of the year, so you want to carry this habit into the new year as well.
If you’re a new business and haven’t really started tracking your financials yet, then the new year provides a perfect time to get started on that.
When you have a clear record of your financial situation, it becomes far easier to achieve your vision because it gives you an objective sense of where you’re starting.
You might also want to check into creating a budget for your business through something like You Need A Budget (YNAB). I’m not a fan of static budgets that most businesses create, but through YNAB you can create a dynamic budget that grows and adjusts with your business throughout the year.
This will allow you to plan for any additional expenditures your business might have to make as a result of your new vision for 2023. YNAB is not a replacement for bookkeeping software like QuickBooks, but it is an incredibly useful tool for any business who wants to keep track of their cashflow.
I’ve been using YNAB for years so I would be happy to help you learn how it works.
As always, I believe a balance between vibration and practical action is the key to maximizing your success.
Find the feeling that you want your business to reflect back to you and hold it consistently, but then also make sure your financials are in order and able to support your vision.
If you need help with any part of this process, whether cleaning up your books for 2022 or creating your vision and preparing your financials for 2023, let’s discuss how I can help.Schedule a Free Consultation