Year-end Preparations

Year-end is a busy time both professionally and personally.  As a small business owner or manager, you have an even longer list of things to think about.  But devoting attention to your business not only helps you end 2021 in the best way possible, it also sets you up for success in 2022.

Here are some activities you should consider focusing on.


  • Run standard financial reports, such as an income statement, balance sheet and a cash flow statement.  Doing so gives you an opportunity to look at the big picture and a guide to your company’s financial position and health. 
  • Compare the amount earned in a period of time (4th quarter 2021 or all of 2021) versus the amount spent through your income statement; it is also called a profit and loss statement.
  • Look at your balance sheet to determine if you are profitable; it does this by comparing everything the business owns(physical inventory, property or equipment, trademarks, and invoices the business needs to collect)against everything the business owes (pension plan obligations or invoices needing payment).
  • Analyze cash flow statement to identify where cash was spent, trends for operating (revenues and expenses), investments (assets purchased and sold), and financial decisions (loans and repayments) activities throughout the year to see if you generated or lost money.
  • Calculate a few metrics to get a better handle on your business: current ratio (current assets divided by current liabilities) ideally should be between 1.5 and 2; debt ratio (total debt divided by your total assets) anything below .3 is considered fair; and gross profit margin (divide profit by total revenue) shows what percentage of your income is actually profit.

If you do need some adjustment (such as more sales and/or fewer expenses), financial documents show you where adjustments are needed and tell you how much you need to adjust.

Also, if you’re in the market for funding, expansion, or mentorship, financial documents are often required to let interested parties see the financial records of your business. 

You might also want to also speak with your accountant or CPA about any questions you might have.

  • Get your tax documents together.  You may need to fill out tax forms, which may include Form 1099-NEC and Form 1096, W-2 Forms and W-3 Forms, State and federal payroll returns (Form 940) or quarterly (Form 941). 

Plus you should compile your income, both business and personal, if relevant.  Gather all your deductions.

  • Verify vendor or supplier information for contact information (contact name, email, telephone number, mailing address); make sure to include any new relationships started during the year.  If time permits, evaluate your vendor relationships and look for opportunities to negotiate better terms for 2022.
  • Reconcile accounts receivable, the invoices remaining unpaid and past due by customers for work completed and/or goods purchased.  Collecting accounts receivables will give boost your cash flow and start 2022 in a better position.
  • Check on payroll and benefits.  Handle any issues or corrections that need to be made before year-end.  Ensure taxable fringe benefits (such as company car, third-party sick pay) and other benefits (such as health and life insurance, transportation subsidies, educational reimbursement) are accounted for.

Human Resources

  • Do an audit of the information you have on all your employees. Make sure you have the correct phone numbers, addresses, and payroll information for each one. 
  • Update the status of new hires or former employees, including access, if any, to computer systems or financial information.
  • Use year-end incentives to reward individuals and your team(s).  Yes, money is always welcome, but also consider paid time off, flexible schedules, perhaps a gift or a party as a way to say thank you as well increase employee satisfaction and morale as you close out the year and head into 2022.
  • Consider conducting a drive for charity for a give-back to your community and as a possible business benefit.
  • Consider whether you need to hire worker or there are areas where you can cut back on your team?  To better suit your business needs, think about adjusting hours, rearranging schedules, and whether some employees can work remotely.  Instead of a new employee, consider a part-time person, seasonal worker, gig worker, or a college intern.
  • Celebrate your business successes.  Document and share the accomplishments and wins achieved during the year by individuals, teams and the business as a whole.  These activities are a great way to build camaraderie, increase morale, and end the year on a high note.

Information Technology

  • Backup your computer, plus ensure all data is stored as securely as possible.  Important files such as accounting documents, point-of-sale systems, customer information, valuable emails, creative and proprietary briefs, employee records, and other critical business information should be put on external hard drives or in cloud-based storage systems.
  • Download your important files and reports, even if you have them on a cloud-based system like Box or Dropbox.  Create two separate digital copies and store them in separate locations, plus have one offline/hard/printed copy that is store in another location.
  • Evaluate your filing naming conventions.  Consider implementing a company-wide file-naming system, such as Name-Date-Invoice#, if you don’t already have one; it will keep your file organized and make finding documents easier for everyone.
  • Backup your contacts and/or cell phone to the cloud or a hard drive, especially if you don’t have a cloud service that regularly conducts a backup.  Make sure you have current information for your most important business contacts.

Other Year-end Activities

  • Take an inventory count. Conduct a count of physical products and material as close to December 31st as possible.  Investigate any significant discrepancies between actual and recorded inventory.  An annual physical inventory is not only important for tax purposes, but is a great way for you to evaluate what products sell well and identify which ones don’t do as well.
  • Contact suppliers about slow-moving inventory; unless it is obsolete, perhaps they will be willing to exchange it for something you can turn over more quickly.
  • Conduct a physical asset count.  Check for all assets on your books.
  • Check business licenses and permits, they may need to be renewed.  Some are subject to sales taxes; others are subject to testing, inspections, and/or certifications.
  • Ensure intellectual properties that need to be protected from potential theft by competitors through registration and then being in commerce “consistently and in a high-quality manner.”  Ownership then must be renewed every ten years.
  • Know and follow-through on your business’ annual compliance requirements, which vary by state and by business structure.
  • Audit your website.  Check to make sure all your website links are functional, that your contact information is up-to-date and works.  Update images or headline to keep your site looking up to date.
  • Update your business goals.  With input from your team(s), customers, partners and financial statements, assess your 2021 goals and determine whether you fulfilled them or where you fell short; perhaps you need a last minute push if your goals are within sight. 


  • If, unfortunately, you are closing your business be aware of and follow the dissolution process defined by your business’ structure.

In all the hustle and bustle of doing business through the end of the year, don’t forget to take some time to do some year-end preparations; it will be time well spent and get your business in good shape for the new year.

Now if you are super ambitious, why not get a start on 2022?

Plan 2022 Goals – with your 2021 learnings, set your goals for 2022 and write them down.

Develop Action Plans – create an action plan to help you achieve each goal.  The best goals are specific, measureable, attainable and time-based.

Plan Time to Keep Financial and Tax Records Up-to-Date – set aside time to update both on a quarterly basis as well as to meet with accountants and/or financial advisors.

Create Your Marketing Plans – think about what areas of marketing you want to focus on.

Assess Employee Engagement – review your compensation and benefits to ensure they remain competitive.  Develop possible promotional paths going forward to foster loyalty and keep your best performers.  Plan company get-togethers (barbeques, hikes, etc.) that are advantageous to everyone.

May 2022 be your best year yet.

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