elcome to our #AskACPA feature where we answer financial, accounting and business questions.
Question: I’m a side hustler and small business owner? How should I go about closing my accounting books at year-end?
One question that is often asked by small business owners as the end of the year looms near is: “What do I need to do to close the accounting books in my business?” Year-end can be a scary time for small business owners, only made scarier by how well (or not so well) the business performed over the year, not to mention the prospect of upcoming taxes. As the majority of small businesses, especially those owned by women owners, has been impacted by the global pandemic, it’s all the more important to ensure a smooth year-end accounting.
While there are many year-end accounting tips out there, as a CPA, I like to simplify the process for small business owners. What often intimidates small business owners is not so much the complexity of the accounting process, but the overload of information and lack of a practical approach when it comes to applying accounting to everyday business. As a result, many small business owners don’t feel empowered enough to take the financial reins of their own enterprise, thus relinquishing their power to others and running the risk of mismanaging their own affairs. To this end, I’m sharing 3 tips (not a million!) to close your accounting books at year-end as a small business owner:
Take care of any unfinished business: unrecorded income, expenses!
Year-end is the time also the time to dot you I’s and cross your t’s business-wise. In other words, it’s time to handle any and all unfinished business as related to your year-end accounting, mainly in these areas:
Got unrecorded income or unbilled invoices? Year-end is the time to catch up on these. Look at your unbilled projects for the year, and send invoices right away. Similarly, if you have any unpaid client invoices, it’s important that you follow up with them as soon as possible.
Got unpaid bills from vendors and contractors? Just as you want to address unpaid invoices from clients, you may also want to check on any unpaid vendor bills. In the same way, make sure any open contractor invoice is satisfied on your part as well.
Are you behind on recording your expenses? As a busy business woman and mom, falling off the bandwagon when it comes to recording your expenses happens. However, as year-end approaches, catching up on entering all your expenses, including your mileage, into your accounting system or software, is crucial. Not only will this help your year-end financial reports be more accurate, but it will also come in handy at tax time to deduct all the tax-deductible expenses your business qualifies for.
Verify your payroll data and make any year-end adjustments! Verify your company’s information, as well employee and contractor information, including updated W-9 or W-4. Any year-end adjustments such as bonuses and payroll periods falling during the holidays should also be handled.
Update your data! Much can change in the course of the year, and these changes can adversely affect the way you record the transactions in your business. This includes vendor and client names, as well as any other changes you can track.
Last but not least, plan to count your inventory at the beginning of the year so as to cover any potential software errors, and calculate your cost of goods sold.
Reconcile your bank accounts!
Once you catch up on any unfinished business, especially in terms of properly recording your income and expenses, it’s important to verify that the totals from your accounting system/software match the bank totals on your official bank statements. Otherwise, differences between the two will create inaccuracies in your financial statements.
As a general rule, your bank accounts and accounting system need to be reconciled on a monthly basis. However, if you’ve fallen behind on this, updating your reconciliations before you close your books is essential.
Run and Review your Financial Reports.
One of the most critical steps when closing your books at year-end is to run your financial reports. These include your Profit and Loss statement, Balance sheet, and statement of cash flows, to cite a few. Other reports to run include your Expense report, payroll summary (if applicable), sales tax summary and mileage log. These will not only give you a more accurate and comprehensive picture of the state of your business, but also help you set your budget and priorities for the following year.
While year-end is a busy time overall, it will be well worth it to do your due diligence in order to accurately close your books and start the year fresh.
Performance reviews are no longer what they used to be. Remember when you used to stress out about your review for days, and prepare for the BIG day by putting your best foot (and outfit) forward, and attempting to master your nerves for the entirety of the review meeting… Fast-forward a couple of years, a global pandemic later, and working more remotely than we ever have, performance reviews have definitely changed. The stress and anticipation are still there, yet are enhanced by a different remote format, a changing work landscape and unstable economic outlook. These factors are all the more impactful for working women and moms, who are already impacted by the existing gender bias in performance reviews.
Effectively, research at the Stanford Graduate School of Business has shown biases exist in the way male and female employees are evaluated, the biggest of these being related to individuals’ personalities, future potential, and exceptionalism. Further, additional research demonstrates employees of color tend to be more significantly and harshly downgraded.
As an introvert and non-confrontational individual, as well as a woman of color, I used to struggle with performance reviews. It’s because of my struggles and the questions that came out of these that I started looking into how to do better in this area. As the COVID pandemic turned remote work in a new normal for many, if not most, even more questions came into play around how to be effective at performance reviews. While the same or similar general advice still applies, from being adequately prepared to presenting oneself well, there are additional nuances and criteria to consider in the modern era of remote performance reviews, some of which are presented below:
Prepare while keeping in mind the current context!
While it is generally (and traditionally) advisable to review your performance, in terms of your accomplishments, challenges and growth during the current year, the context we’re living demands that we consider additional criteria. Switching from traditional to remote work during the pandemic, especially for working women and moms who suffered the brunt of this global crisis, was a life and career-altering change for many, if not most. This drastic change, along with the trauma we all underwent, not only transformed the nature of work, but also that of employees’ performance.
As you review your own performance during this very unique pandemic time, keep in mind the context in play is vastly different than the one you’ve been evaluated in previously. The rules of work have changed, and so have those of performance reviews. As such, look at your performance in an evolved and practical light considering the new factors, environment and systems you’ve faced, and asking yourself additional, more evolved questions to gauge your own work, such as:
How did my work change with the pandemic?
What challenges have I faced and how did I overcome them?
How did I successfully manage to adjust to change?
In what ways did I grow?
What new metrics did I have to work with and how did I perform under these?
Work on your presence!
It’s one thing to be present in person, using facial cues and body language to successfully steer and direct a performance review meeting. It’s another to be assessed remotely, in a non-traditional way and environment, without the natural cues which were available in previously more traditional settings. Believe it or not, this can add another layer of complexity, stress and bias to performance reviews, as remote work has been shown to make working women more susceptible to unconscious bias?
This is where it becomes so important to work on your presence. The first step is to turn on your camera, and ensure you are presenting yourself in a positive manner. This does not just include your personal presentation, from the way you’re dressed to your personal demeanor, but also the environment around you. Creating a clean, uncluttered, and distraction-free background will allow you to present a more professional front, while allowing you to focus on the meeting.
Additionally, remote meetings are perceived by many as an opportunity to multi-task and address other pending priorities. As a working woman and mom with so much on your plate, it may be tempting to do so during your remote performance review. However, refraining from multi-tasking (that email can wait!) will also provide you with the mind space, concentration and availability to make your review as efficient and fruitful as possible.
Don’t be afraid to make the ask!
Last but not least, as remote performance reviews can appear to be more impersonal, they can make it more challenging to be more transparent and actually ask for what you actually need. This is all the more important as prior studies have confirmed a gender divide in negotiations.
Considering the different post-pandemic context that has plagued so many working women and moms with issues ranging from lack of childcare to the unequal distribution of household chores, your professional needs may also have changed. Are you in need of added flexibility? Have your salary requirements changed? Has the new remote context added to your responsibilities and requirements, leaving you short of the resources you actually need to perform your work?
The answers to these questions are important fact to bring to the table during your performance review, and use to ask for what you need in these different times.
Along with these, it’s also crucial to ask for current and future expectations based on the new work context we’re under. Last but not least, asking for next steps is a must as you conclude your remote performance review.
All in all, as you prepare for your performance review, please keep in mind that while many of the traditional advice applies, the context has drastically changed. Taking a more evolved and proactive stance in light of the current situation you’re in can help in having a more transparent, effective and impactful performance review.
How are you approaching your remote performance review in 2021?
The end of the year is a particularly busy time, especially for working women and moms. Not only are most of the holiday-related tasks, including gift-buying and giving, as well as hosting and prepping, on women’s to-do lists, but work responsibilities also tend to pile up then too. With all the distractions and other personal and family obligations over the holidays, staying on track and on task at work can be quite the challenge. As working moms, it becomes a matter of efficient strategizing to boost your career (without losing your sanity).
In my experience, attempting to do it all over the holidays (and frankly at any other time) is close to impossible. Rather, it forces so many of us to over-extend ourselves, push beyond our limits, and threaten our own mental and physical health, not to mention our sense of self and joy during what is supposed to be the most wonderful time of the year.
This is where a solid strategy comes into play, one that does not require piling on more than what is necessary, but rather conducting an honest assessment of where we stand and fill in the gaps where absolutely needed:
Check in with your beginning of the year goals
There’s a famous African proverb that says: “In order to know where you’re going, you must know where you’re coming from.” This applies to all areas of life, but I’ve found it most impactful in the workplace. To close out a year successfully and set out the best direction for the future, it’s important to go back to what was set in motion at the beginning of the year.
What were your beginning-of-year goals? What priorities did you set to achieve when the year started? How did you do with these? This will not only allow you to celebrate what you have been able to achieve and get some much-needed encouragement and motivation. It will also allow you to identify what is missing and may need to get done before the end of the year.
Prioritize impactful pending tasks
As you identify and prioritize remaining tasks that need to be addressed by the end of the year, or have to put out some last-minute holiday fires, take some time to prioritize. Again, not everything needs to be done by December 31! Not everything is a priority.
However, there are some tasks that have more impact on your career and track record, as well as on the short-term welfare of your team, department and/or organization. These are the tasks that should be on your priority list. Anything else that can be postponed, delegated, or even cancelled should go.
Communicate your needs and plans!
As busy as the end of the year may be, it’s also a time when communication with your team and colleagues is of utmost importance. As you set your priorities and to-do’s to attend to, including your personal priorities, it’s crucial to communicate these to those who are also impacted by your work.
Getting on the same page with those you work with will help you avoid many a misunderstanding, and even get you the support, help and encouragement you need to bring your work to a successful close this year.
Say NO
If there is any time when using the power of NO comes in handy, it’s during high-stress, high-expectation times like the holidays. As a working woman and mom, so much is expected of you over this time, from family, friends and colleagues alike. This is the time to know and recognize your own limits, not in an admission of weakness (all to the contrary), but rather in an honest and quite powerful way to preserve yourself and others.
Keeping the lines of communication open and delineating the impact of the tasks on yours and your team’s to-do list, and most importantly being honest and transparent, will save you much trouble and headache. Most importantly, it will allow you to free up time to focus on what truly matters to you.
Recap and learn
One of the most important parts of successfully closing the year at work is being able to learn from the time that has passed. In a haste to get it all done, so many of us miss out on the opportunity to truly learn and grow just by analyzing the patterns of the past year and drawing invaluable insights from these.
What worked well this year? What didn’t work so well? What are impactful areas of growth? What should be kept, and what should be dropped, delegated, or postponed? What can be tweaked or totally changed? These are just some questions to ponder and learn from as we close a professional year.
Set your goals for next year
Last but not least, out of all that’s been done, learnt and worked on during the year, along with our desires and purpose, our future goals should emerge. While they may not be totally clear as we close the year, they should feed off our experience, victories and lessons learning to at least start forming the beginning outline of what we want the future to look like for us.
How do you successfully manage the close the year at work as a working woman and mom?
As much as many of us look forward to the holidays, there’s no denying that they can also be quite the stressful financial time, especially for working moms. As the imbalance in the sharing of household responsibilities persists throughout the pandemic and beyond, working moms tend to bear the glorious, yet exhausting, burden of managing and orchestrating the holidays. This also comes at the cost of much financial stress and instability, especially coming out of the global health crisis created by the pandemic. Considering the heavy impact of the pandemic on working moms, saving money becomes not only important, but necessary…
As a working mom myself, as well as an accountant by trade, managing my financial resources, especially during the holidays, is always important. While there are a number of budgeting and cost-saving tools out there, one of these, that has particularly attracted my attention is Fluz. At a time when demands on your money are so pressing and numerous, this app is reinventing the concept of cash back. Beyond one-off incentives and small rewards, Fluz offers its users the opportunity to leverage each and every purchase by earning money back instantly. This is so good that as you purchase a gift card, you can earn cash back on it even before you use it! In addition, this app also creates countless opportunities to use one’s network to earn even more!
Here is how it works:
Step 1: Pick the stores you want to shop at!
You can pick from a variety of stores including everyday favorites like CVS, Dunkin’ Donuts, and Domino’s, or family favorites like Nike, Baby Gap, or food and entertainment spots like 99 Restaurants or Applebee’s. Or you can also use the Fluz app to earn cash back on some of your more seasonal needs from stores such as 1-800-Flowers, or 1-800-Baskets. There is literally a store for all your needs that you can shop at using the Fluz app!
Step 2: Pay with your Fluz app.
Once you pick the store of your choice, then you can whip open your Fluz app, select said store, and enter your checkout amount so you can pay and get a gift card code in exchange.
Step 3: Present your barcode.
All you have to do then is present the code to the store cashier or paste it during the online checkout process! Easy enough?
Step 4: Instantly earn your cash back!
As you make your purchases as described above, you instantly earn cash back. No need to wait to actually redeem your gift card! You earn money back right when you pay and obtain your gift card code…
The best part? This doesn’t just stop with you. The more the merrier, actually…You can invite your network of friends, family, associates, and colleagues to join in the fun (and savings) simply by sharing your referral code online.
Let’s begin right here, as I invite you to join in the fun by using my referral code: THECORPORATESISTER12
Log in to the Fluz app here, enter my referral code and start earning cash back. And you can do the same by inviting your network to join in as well!
Welcome to this week’s News Roundup, where we chat about what happened in the news around working women and moms’ careers, businesses, parenting and lifestyles. Read up…
· Entrepreneur shares 3 communication errors that negatively impact women leaders;
· Using Linked In resume builder? Lifehacker tells you when to use it and when not to use it;
· Mamas, want to enjoy more time with your kids? Working Mother suggests spending less time with them;
· Got Imposter Syndrome? Forbes Leadership says the best antidote is knowing your value;
· Hello Black Friday! Corporette shares Nordstrom’s Black Friday sales;
· Starting your Christmas shopping? Black Enterprise lists 8 must-grab books for kids;
· Ready for some Thanskgiving pies? Joy The Baker shares 6 best pie ideas for Thanksgiving.
