Knowledge Base - Best Practices

Year End Planning Will Pay in the Year to Come

As the end of the year approaches, it is time to do some proactive planning that can pay real dividends: This planning should cover both the balance of the current year and next year.

Focusing on four main areas, General Business, Financial Statements, Income Taxes and Personal, here is a list of some of the questions that should be answered.

General Business:

  • Review actual results to date for the current year and evaluate how they compare to your goals. What has worked, what didn’t?
  • How will general business conditions impact your business in the coming year? What new risks and opportunities need to be addressed?
  • Review profitability information by product line, business segment, customer or job. and determine what you want to do more of or less of in the next year.
  • Prepare your plan for the next year. Get it written down.  If you use an outside facilitator or strategy consultant get your planning session scheduled.
  • If you don’t use an outsider to help you with your planning, should you? (An outsider can bring discipline and accountability to the process.)
  • Review your insurance coverage. Is it adequate?
  • Do you have a succession plan in place for your business? What if something happens to you?
  • Are all of your critical systems properly backed up? What if you had a fire?
  • Have all employees received an annual performance review? Are there any personnel issues that need to be addressed?
  • Are you prepared to provide your employees with required notifications regarding employee benefits, annual elections, updated exemption forms, and adjustments to taxable wages?
  • Any changes required to the employee benefit plans due to affordability or new or pending laws?

Financial Statements:

  • Are your accounting records up to date so that you can make a projection of how the current year will turn out?
  • Are all account reconciliations currently up to date to facilitate the closing of the books after year end?
  • Are there accounts receivable that should be reserved for or written off prior to the end of the year?
  • If your business carries inventory, do you need to plan a physical count as of the end of the year?
  • Has depreciation on your fixed assets been recorded during the year? Have you considered depreciation on current year additions?
  • Have all new asset purchases and bank loans been recorded on your books?
  • Are there any liabilities, for example, pending legal actions or warranty issues, which will need to be recorded prior to year end?
  • Do you have a plan in place to properly “cut-off” revenue at year end to properly match revenue and expense?
  • Will there be bonuses, profit sharing contributions or discretionary retirement plan contributions paid prior to the end of the year? How will these payments affect cash flow?
  • Will you be in compliance with your bank covenants at year end?
  • Do you need to make arrangements to receive statements as of the end of the year for cash value of life insurance, loan balances, etc.?

Income Taxes:

Set up a strategy meeting with your tax advisor three months prior to the end of the year. Sub S Corporations and LLC’s have caused business and personal taxes to become intertwined in many cases. Some things to cover in that meeting are:

  • What’s new in the tax code for this year and how will it impact you?
  • What is anticipated to change in the tax code in future years that should be considered now?
  • Do you have the best business structure for your unique circumstances?
  • What is the status of any “carryover” items from prior years?
  • What are the current rules for additional first year depreciation on asset purchases? (Section 179) Is there an advantage to planning needed asset purchases before or after the end of the year?
  • Are there any tax credits available to you and what are the “phase out” rules?
  • Is there an advantage this year to legally deferring income or accelerating expenses?
  • How are you providing for your retirement? Are you taking full advantage of available tax benefits?
  • Should any unrealized gains or losses on investments be recognized prior to the end of the year?
  • Are there charitable donations that should be made before the end of the year? Should donations be made from business or from personal assets?
  • Are estimated tax payments up to date and are any changes warranted on the remaining payments based on a current projection of income?


  • How does your business fit into your life and personal goals?
  • What training or personal development would you benefit from in the coming year?
  • Is your estate plan up to date? Do you have adequate life insurance?