Now is the time to review and update your business plan. Gather the documents you will need to file your taxes, review how your business performed in 2011, make arrangements for its financial and personnel needs in 2012, assess your market position and develop a strategy for the coming year. Here is a checklist of areas to consider:
Gather and organize receipts, invoices and other financial records if you haven’t already done so. Having data readily available will allow you to claim allowable deductions when you file taxes—something many small businesses fail to do.
“For tax purposes, businesses with less than $500 million are normally considered small businesses and thus tax deductions can be quite substantial,” says Steve Hurok, tax director at BDO Seidman, LLP. “Yet there are still many small business owners who are not aware of deductions and incentives that can make a significant difference in their financials.”
Be aware of tax advantages of decisions, and do not make them lightly. Consider discussing your situation with a tax attorney or CPA to ensure that you maximize the benefit of any tax decision you make. For example, consider net operating losses (NOLs).
Barbara Weltman, business consultant and AOL Small Business columnist, says, “You can deduct business losses against your income in other years. You can carry back the losses for a set period (typically, two years) and forward for up to 20 years. Or you can waive the carryback entirely and just carry your losses forward. Waiving the carryback can give you more bang for your NOL buck if you’re in a higher tax bracket in future years as compared with prior years.”
Accounting and Financial Analysis
Review your year-to-date profit and loss statements and balance sheets, and calculate the financial ratios that are critical benchmarks to your industry. Your industry or trade organization, accountant or Small Business Development Center should be able to provide you with benchmark data.
How you have performed against these benchmarks can reveal the strength or weakness of your business and highlight any areas that should be improved. Critical data will vary by industry type but may include sales per square foot, labor cost per sale, inventory turnover and inventory maintenance cost, as well as financial ratios like the current ratio (current assets to current liabilities, a measure of how capable the business is of paying its bills).
Review and update information and links on your website. Ensure that you are responding to inquiries on any social media sites you have established, and provide a “new-year” message on them. Perform reputation management. Executive News Editor of Search Engine Land Matt McGee says, “What other people say about you online matters a lot. Bad business or product reviews can spread quickly, hurting your bottom line. At minimum, use Google Alerts to keep track of what people are saying. Use it to monitor your company name, your own name and the names of important people in your company.”
Review directory listings for your business. “Make sure you’re listed in the Yahoo Directory, Open Directory, Business.com and Best of the Web directories. Open Directory is the only one that’s free, but it can also be the hardest listing to get. Directory listings aren’t a golden ticket to high search engine visibility, but they do represent the foundation of a link-building effort,” McGee says.
• Organizational Structure
Review your legal structure. Should you become an LLC or corporation? Would you benefit from filing for any statuses like woman-owned business or veteran-owned business? If you have employees, is your reporting structure reasonable, or do too many employees report to a single supervisor?
• Human Resources
If you have employees, do you have a written employee manual? Are policies for sick leave, vacation, holidays, overtime, training and other issues clear to the employees
• Customer Service
Do you have clear written policies and procedures for handling complaints, returns, warranty calls and other issues? Do both customers and employees know what your policies are?
• Business Continuity
Do you have a business continuity plan that addresses how you will respond to risks to your business, whether accident (fire), purposeful (theft) or natural (storm damage)? Have you reviewed your insurance coverage recently to see if it is