Owning a business can be complicated. There are so many things a business owner has to consider – finances, growth, development, employment policies, and more. The end of a year is the perfect time to take a fresh look at your finance and business operations and make any necessary adjustments for the year ahead. If you’re facing an audit or a substantial tax bill, you might not be able to afford the Internal Revenue Service’s (IRS) demands. That’s why it’s a good idea to hire a professional accountant to look at your taxes. For entrepreneurs and small business owners especially, taking the time to review the following issues could be crucial to the future growth and development of your organization.
1.Review and revise your business plan as needed.
You may think that forming a business plan is something to be done one time prior to the creation of your company. However, most well-managed businesses take the time to review and revise their plan regularly to ensure they stay consistent with the organization’s goals and values. Your business plan can be used as a tool to help steer future growth, management decisions, and metrics.
2. Get ahead on your taxes.
As a small business owner, you are probably well aware of the tax deadlines you will have to meet before the tax filing deadline. Preparing now will save you a headache later! If this is your first-time filing taxes as a business owner, you may want to consider consulting with an experienced corporate tax attorney or accountant.
3. Conduct an Annual Corporate Minutes Evaluation (ACME) with your attorney.
Corporations will maintain certain corporate formalities to uphold the separate-ness of the business from its owners. These formalities usually include holding and documenting the minutes of the annual shareholder and director meetings for the corporation. Often completed in January, these evaluations will help your business attorney to prepare personalized annual corporate minutes to document items such as corporate expenditures, dividends, any property acquisitions, or any other important event for the corporation.
4. Keep your finances up to date.
Great bookkeeping is an essential aspect of any business. If done correctly, you should know exactly where your money is coming in, where it is going out, and it could even help alert you to a variety of potential business pitfalls that might otherwise go unnoticed. If you are planning to seek funding in the coming year to grow your business, up to date bookkeeping records will help your business attorney walk you through the options when it comes to deciding what funding structure works for you or how much capital you need. Additionally, improper bookkeeping could lead to a plethora of lawsuits for a business owner, or worse – reorganization or liquidation through bankruptcy.
5. Review your Succession Plan or create it if you don’t have one.
The goal of a business succession plan is very similar to that of a Will and provides several benefits to owners and partners. A well thought out plan can help ensure an agreeable price for a partner’s share of the business, helps established a timely settlement should one partner exit, addresses tax implications to the owner and business upon sale or transfer of ownership, and can even serve to name a successor.
6. Finalize your staffing plan.
For small business owners, hiring your first employee can be intimidating. Considering your new goals for the coming year, any expectations for increased or decreased customer demand, and your current staff headcount will all help you project your needs for the year ahead. Business owners can also utilize freelancers, on-demand talent, or other 3rd parties – so if you want to “staff up” this year, then it’s a good idea to have a strategy in place first to ensure your budget and business plan support the increased growth.
7. Review your Employee Handbook.
Every business that has employees, regardless of how many, should have an employee handbook. Reviewing your handbook every year is of the utmost importance for business owners. Not only are laws and regulations regarding the workplace constantly changing, but this is a great opportunity to update any of your employment policies. These policies likely include your Workplace Sexual Harassment Policy, Social Media Policies, PTO and even beneficiary designations. Keeping your employee handbook up to date is not only a benefit to your employees, it is a benchmark for employee expectations.
8. Cover your bases with business contracts.
Now is a good time not just to review your current contracts to ensure everything is in working order, but to prepare for the year ahead and make any necessary updates. A mistake many small business owners make is using generic contract templates. While this may seem like a way to cut costs , it could cost you in the long run. This is not to knock templates – they are a great resource for entrepreneurs and small business owners – but even if you use a general template as a starting point, it is important to consult with your business attorney to ensure the contract is uniquely fitted to your organization before you utilize it. After all, a 3rd party business contract for a restaurant likely won’t look the same as a 3rd party business contract for a healthcare company.
Being a business owner is hard work. Hiring a team of professionals to help you navigate the ins and outs of day to day finance and business operations like those above will likely be crucial to your long-term success. You do not have to, nor should you, walk this path alone. Working cohesively with your business partner, attorney, accountant, financial planner and mentor are necessary steps to ensure you build a foundation for a business that will flourish for years to come.
Search Fund Accelerator Boston (SFA) is an innovative Private Equity fund designed to optimize a niche investment model known as the Search Fund. SFA provides support and committed capital to a handpicked cohort of entrepreneurs, each seeking a single business to acquire, actively manage, and grow. Our entrepreneurs are accomplished young professionals and alumni of the world’s top business schools, namely Harvard Business School, INSEAD, Kellogg, and Booth.
Attorney John C. Woodman practices at Sodoma Law in the area of Business Litigation and Bankruptcy. He provides litigation and counseling services to a wide variety of individuals and business entities. Considered a thought leader in his field, he is published and has spoken at various events on topics such as Chapter 11 Bankruptcy, corporate counsel needs, and Creditor/Debtor Rights. John received his J.D. from Wake Forest University School of Law.