As the end of the year approaches, small business owners across Louisiana take stock of their operations and begin preparing for a strong start to the new year. Whether your business experienced growth, faced unexpected challenges, or navigated a mix of both, the final months of the year provide a valuable opportunity to review, organize, and optimize your financial position.

A thorough year-end financial checklist can help you avoid surprises, reduce tax-time stress, and set your business up for continued success. Below is a comprehensive and practical guide to what every small business owner should review before December 31.

1. Review Your Budget and Compare It to Actual Performance

Your budget tells the story of what you planned to achieve. Your actual performance reveals what really happened.

Take time to compare the two:

• Did revenue match expectations? If not, identify trends like seasonal dips, strong months, and new customer patterns.
• Were expenses in line with projections?
  Check for cost overruns, vendor pricing changes, or unnecessary spending.
• Did you meet profitability goals?
  This helps determine whether price adjustments or spending changes are needed in the upcoming year.

A year-end budget review helps you establish realistic, informed financial goals for the new year and identify opportunities to improve efficiency.

2. Prepare for Tax Season Early

The earlier you begin organizing your tax records, the smoother your tax filing process will be.

Key steps to take before year-end:

• Gather all receipts, invoices, and financial statements. Digital accounting tools make this easier if you categorize and upload documents throughout the year.
• Reconcile all accounts including bank statements, credit card accounts, and lines of credit.
• Review deductible expenses, such as:
  
  
• Office equipment
• Business-related travel
• Professional services
• Vehicle expenses
• Employee benefits
  
  
• Update your accountant about any major changes, such as:
  
  
• New hires
• Equipment purchases
• Business loans
• Ownership changes

If applicable, consider whether additional year-end purchases or expenses align with your tax strategy.

Tip: Consult a qualified tax professional for personalized tax guidance and to ensure compliance with federal and state requirements.

3. Evaluate Your Cash Flow

Cash flow remains one of the most important indicators of business health. A year-end cash flow analysis can help clarify whether your business has sufficient liquidity to manage seasonal fluctuations, unexpected expenses, or planned growth.

Consider the following:

• Did your business experience cash shortages during certain months?
• Are you maintaining enough reserves for emergencies or slow periods?
• Do you need a line of credit or other financing to support next year's operations?

Understanding cash flow trends helps ensure your business has the financial stability to seize opportunities and maintain operations year-round.

4. Review Payroll and Employee Records

Accurate payroll is essential for both compliance and employee trust.

Before the year ends:

• Confirm employee addresses and personal information for W-2 or 1099 forms.
• Verify compensation records, bonuses, commissions, and overtime.
• Review employee classifications (full-time, part-time, contractor) for accuracy.
• Ensure all payroll taxes have been withheld and paid correctly.

If you plan to offer year-end bonuses, notify your accountant to ensure they are recorded properly.

5. Update or Review Business Insurance Coverage

Your insurance needs may change as your business grows, adds staff, or invests in new equipment.

Review policies for:

• General liability
• Commercial property
• Workers’ compensation
• Cyber liability
• Business interruption coverage

Ask yourself:

• Did your revenue or workforce grow this year?
• Did you add equipment, expand your building, or change locations?
• Is your current coverage still appropriate for your needs?

Updating policies at year-end ensures your business remains adequately protected.

6. Conduct a Thorough Financial Records Audit

Accurate and organized financial records help with budgeting, tax preparation, loan applications, and audits.

Review:

• Balance sheets
• Profit and loss statements
• Bank reconciliations
• Accounts receivable aging reports
• Accounts payable reports

This is also a great time to:

• Write off uncollectible invoices after consulting with your accountant
• Close out old purchase orders
• Confirm all transactions have been recorded

Good recordkeeping strengthens your financial foundation and improves your ability to make informed decisions.

7. Assess Your Long-Term Debt and Financing Needs

Evaluate any outstanding loans, lines of credit, or financing arrangements.

Consider:

• Did you make all payments on time?
• Should you consider refinancing?
• Will you need new financing to support expansion next year?

Understanding your current debt position can help you plan for future borrowing and growth opportunities.

8. Set New Goals for the Coming Year

With a clear picture of your year-end financials, you can establish meaningful and realistic goals for the new year.

These may include:

• Revenue or profitability targets
• Hiring plans
• New product or service expansion
• Technology upgrades
• Cost-control strategies

Setting clear goals helps guide your budget, operational plans, and financial strategy.

Start the New Year with Confidence

Completing a year-end financial review is one of the most valuable steps a business owner can take. By evaluating your budget, organizing your tax information, assessing cash flow, and reviewing policies and payroll, you can move into the new year with clarity and confidence.

American Bank supports small businesses across Louisiana with financial tools, lending solutions, and personalized service designed to help you grow. A well-prepared business is a thriving business, and year-end planning is the first step toward long-term success.