Beginning of the Year Business Reminders
Updated: Jan 17
Ah, a fresh new year. Many of us see this time as an exciting opportunity for a fresh start. We are ready to take on our New Year’s resolutions and make vision boards, but as business owners, we can’t totally forget about last year QUITE yet.
I hate to be the one to bring this up at the beginning of January, but here I go…you have to prepare for taxes! I know it’s the last thing you want to think about, but if you get started now, you’ll be able to focus on the future of your business when everyone else is scrambling to remember what happened in 2022 once April rolls around.
And don’t worry - I have some great tips, tools, and resources for you. While I have not yet discovered a way to automate the tax prep process entirely, I did create a Business Finance Tracker to make it as easy as possible.
It’ll help you with ALL of the items on this list, so be sure to check it out if you’d like to make tax preparation less of a headache.
Please note, some of the links on this page might be affiliate links, meaning if you take action (ex. subscribe, make a purchase), I might earn a little something at no extra cost to you. Any recommendations I make for programs or tools are because I truly believe in them and have actual experience using them.
Write Down Your Mileage
Do any kind of driving for your business? Be sure to write down or take a photo of your vehicle odometer(s) reading at the beginning of each year (ideally, January 1st). When you file your taxes, you’ll need to know the total number of miles your vehicle drove, as well as the total number of business miles you drove.
For more detailed information, I recommend talking to your tax or accounting professional.
If you’re looking for a free app that will automatically track your miles and your annual odometer reading, I suggest the MileIQ app. It even sends you an alert at the beginning of the year so you don’t forget to check your odometer
Take Inventory of Your Products
Are you selling products that you make or keep in stock? It’s important to take a complete inventory on January 1st (or close to it) of the products and/or raw materials you have on hand, as well as their value.
Most e-commerce platforms offer a way to track inventory and run reports, which makes this step a matter of a few clicks. If you haven’t decided on a platform yet, you can track your inventory manually by setting up a free spreadsheet using Google Sheets.
Send & Collect 1099s for Contractor Work
Did you receive more than $600 from any single business or client? Did you pay more than $600 to any contractors or small businesses? In some cases, a 1099-NEC Form may need to be issued.
While I recommend consulting your tax professional or visiting the IRS website for more information, I wanted to make sure you were aware of this obligation. I’m always surprised how many people do not know about this!
Get Your Tax Docs Together
Start now! Even if you’re waiting on some of your tax documents to arrive, I encourage you to start getting all of your tax information together now.
It’s easier to reconcile items for last year when they’re fresh in your mind, plus, if you end up owing something, it gives you several months to prepare and save, if necessary. Not to mention, most tax professionals get bombarded with last-minute filings in April, so they will appreciate you coming to them early.
To help track income, expenses, and other items needed for taxes, there are several inexpensive software and programs you can use. Many of them connect with your bank account and sync your transactions, which is a huge time-saver when it comes to reconciling everything!
Personally, I use a system called Freshbooks, along with my Business Finance Tracker, to keep me on top of my tax info at all times. I use Freshbooks as a payment processor, expense tracker, and mileage tracker. I use my Business Finance Tracker to record odometer readings, home office expenses, and donations.
Plus, at the end of the year, I can export my income, expense, and mileage data out of Freshbooks, copy it into my Business Finance Tracker, and upload it to my CPA’s file share system in just a few minutes.
Again, I’m a fellow small business owner, not a tax professional, so I encourage you to speak with your accountant to get the best and most accurate tax advice for your specific situation.
If you have any questions about automating or streamlining the systems you’re using to track your inventory, expenses, etc., be sure to schedule a free consultation so we can chat.