With the start of the new year, it’s time to reflect on your company’s finances and figure out how best to position your small business for greater success. Here are some key areas to focus on when tightening up your financial and accounting management for 2015.
Are you on target to get your employees their W2 forms by the end of January? If you’re finding it’s a last-minute scramble to meet this deadline, take some time in early 2015 to streamline your payroll process. Be sure you’re staying on top of all forms you need to file and payments you need to make. By being pro-active throughout the year, you’ll eliminate the post-new-year rush to get your W2s out on time.
Were you able to settle all unpaid bills before the end of 2014? If not, make 2015 the year you improve your collections process. Expediting the receipt of payments will give you better control over your cash flow and a clearer sense of your company’s finances. For tips on how to get started, check out 9 Steps to a Better Startup Debt Collection Process.
Do your company’s accounting practices following GAAP–that is, Generally Accepted Accounting Principles? If not, now is the time to brush up on best practices and take your financials to the next level. This is especially important if you plan to seek investment money or sell your business in the near future. To satisfy investors and/or buyers, you’ll need GAAP compliant financial records.
Are you frantically trying to get your 1099s done? Rushing through tax papers in January is a less-than-ideal way to start the new year. Instead, you should aim to keep up with the 1099 process throughout the year. The simplest approach is to collect 1099s along the way, before you issue payments, rather than trying to figure out who you need them from at the end of the year and have to chase down people who are likely preoccupied with the holidays. If you typically fall behind on the process, remember the filing due dates for 2014: get 1099s to recipients on or before January 31st and to the IRS on or before February 28. You can push the latter deadline to March 31st if you’re filing electronically.
The new year means new tax rules, new tax needs—and an opportunity to capitalize on potential new tax savings. Contact your tax professional soon to find opportunities to minimize your taxes in 2015. Also, preparing tax estimates now will help prevent expensive surprises next year.
Your next valuation
Take stock of your company’s valuation. When do you need to schedule your next one? At a minimum, valuations must be redone annually. Keep in mind that sometimes you’ll need a new one even sooner than that. Events that require a new valuation include: trying to value your company’s common stock, planning to issue stock options, raising a new round of funding, or planning to sell your IP to another company.
Anticipating when your next valuation needs to be done and planning accordingly will help you be prepared instead of scrambling at the last minute. Firms like Early Growth Financial Services can help you prepare your 409a valuation.
Review your internal controls. Are they working properly? Look for weak spots where the potential for fraud or errors runs high. Improving protocol now can help reduce problems later this year.
Review your 2014 financials. Are there any opportunities to reduce expenses in the new year? Use your 2014 data to create a leaner, meaner budget for 2015.
Look before you leap
As you reflect back on the past year, consider what you have been doing well and where your company needs work or should go in a new direction. Now is the time to informally audit your business and to make plans for 2015, including refreshing your financial forecasts and budgets. Tackling the items on this list early in the year will help you to maintain cleaner financials, with less stress and a better sense of where your company is now and where it’s headed.
Guest blogger David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides early-stage companies with accounting, finance, tax, valuation, and corporate governance services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.
Need more accounting and finance support for your startup? Early Growth Financial Services specializes in startup accounting and finance support.