Strategic End-of-Year Business Planning Guide for Small Business Owners

As the year draws to a close (how did that get here so soon?!), some small business owners might have a nagging suspicion that they need to wrap some things up before year-end. As a business owner myself, I know all too well how the demands of the day-to-day running of our business often leaves little time for strategic planning!

Yet, this is precisely the time of year to think about taking a step back to assess and prepare for what's ahead. End-of-year business planning is not just a ritual; it's a powerful tool that can set the stage for your company's growth, efficiency, and financial success in the coming year.

While the thought of adding another task to your already overflowing plate can seem daunting, investing some time now to plan can save countless hours and potentially thousands of dollars down the line. It's about working smarter, not harder, and positioning your business for success in an ever-changing economic landscape. That's why I'm sharing the steps small business owners should take before the year ends to ensure they're not just surviving, but thriving.

From critical, must-do tasks like filing your beneficial ownership information (BOI) with the Financial Crimes Enforcement Network (FinCEN), maximizing retirement contributions to strategic moves that can optimize your tax position, I'll cover the bases that are often overlooked but can make a substantial difference to your bottom line. I'll also talk about a process for setting meaningful goals and objectives for the upcoming year, providing you with a roadmap for growth and achievement.

Top 5 End-of-Year Tasks for Small Business Owners

Task 1: File a FinCEN BOI Report

One of the most important new requirements is the FinCEN Beneficial Ownership Information (BOI) filing. This federal mandate, aimed at enhancing transparency in business ownership, requires most small businesses to report information about their beneficial owners. Completing this filing not only ensures compliance but also helps protect your business from potential legal issues and penalties. Follow this link to a useful guide from FinCEN about the requirements. The filing itself is fairly easy and shouldn't take too long.

Task 2: Max Out Your Retirement Savings

Next, consider maximizing your retirement contributions. For small business owners, options like SEP IRAs, SIMPLE IRAs, or Solo 401(k)s offer opportunities to reduce your business and personal taxable income while building your retirement nest egg. The end of the year is the perfect time to review your profits and income to determine how much you can contribute. Remember, these contributions not only secure your financial future, but also provide immediate tax benefits, potentially lowering your current year's tax liability.

Task 3: File Your Annual Report with the Secretary of State

This requirement, which varies by state, is essential for maintaining your business's good standing. Failing to file can result in penalties or even the dissolution of your business entity. While it might seem like a simple administrative task, it's one that's easily overlooked in the hustle of daily operations. Set a reminder to ensure this crucial filing doesn't slip through the cracks. Colorado's Secretary of State publishes a list of periodic reporting requirements by business type.

Task 4: Consider Tax Planning Strategies Only Available to Business Owners

For businesses experiencing a lower-than-usual profit year, there's an opportunity to implement creative tax planning strategies. Consider accelerating your income into the current year if you're in a lower tax bracket and deferring expenses to the next year if you're anticipating being in a higher tax bracket then.

Additionally, if you operate a pass-through entity like a sole proprietorship or LLC, explore whether electing for pass-through entity (PTE) taxation could reduce your taxes. This strategy, available in many states including Colorado, can potentially provide bigger savings on state and local taxes (SALT) than the $10,000 limit on itemized deductions.

Lastly, don't overlook the potential benefits of the home office deduction. With the rise of remote work, many business owners may now qualify for this deduction. Make sure to review the IRS's eligibility criteria to see if you can deduct up to $1,500.

Remember, every dollar saved in taxes is a dollar that can be reinvested in your business's growth or your personal financial goals!

Task 5: Setting Goals and Objectives for the New Year

With the operational tasks addressed, it's time* to shift focus to the future of your business. Setting meaningful goals and objectives for the upcoming year is a critical step in driving growth and achieving long-term success. The key is to create SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound. This framework ensures your objectives are clear, trackable, and aligned with your overall business vision.

*While the operational tasks above have to be done by the end of the calendar year, if a mad rush during the holiday months of November and December stresses you out, do what I do! Create your own "fiscal year-end" and plan around that. I spend the months of January and February analyzing the firm's previous year's metrics, setting annual goals and building a strategic business plan. This kind of flexibility is one of the reasons you chose to run your own business, right?

Begin by reflecting on your business's long-term vision. Where do you see your company in next two to five years? With this vision in mind, work backwards to set annual goals that serve as stepping stones towards your ultimate aspirations.

For instance, if your long-term goal is to expand into new markets, your objective for the coming year might be to increase your customer base by 20% in your current market. Once you've identified your primary goals, you can break them down into smaller, actionable steps. This could involve setting monthly or quarterly targets, outlining specific strategies, or assigning responsibilities to team members.

If you have one, involving your team in the goal-setting process can really enhance everyone's engagement and commitment. Schedule a planning session where you share your vision and invite input from your employees. Their insights can provide valuable perspectives and innovative ideas.

As you finalize your goals, establish clear accountability measures. Assign specific responsibilities, set regular check-in dates, and determine how progress gets measured and reported. Consider implementing a visual tracking system in your workspace or using project management software to keep everyone aligned and motivated.

Regular reviews of your goals - perhaps quarterly - allow you to assess progress, celebrate successes, and make necessary adjustments. By approaching your business planning with both structure and flexibility, you're setting yourself up for a year of focused growth and achievement.

Conclusion and Call to Action

By tackling critical tasks like your business filings and retirement contributions, you're not just ticking boxes – you're building a solid foundation for growth. The tax planning strategies we've discussed, from considering pass-through entity taxation to leveraging home office deductions, can significantly impact your bottom line, freeing up resources for reinvestment in your business.

But perhaps the most powerful tool in your arsenal is the act of setting meaningful goals and objectives for the coming year. By aligning your short-term actions with your long-term vision, involving your team in the process, and establishing clear accountability measures, you're creating a roadmap for success that goes beyond mere numbers.

Taking a proactive approach to business planning isn't just about preparing for the future – it's about shaping it. As you stand on the threshold of a new year, remember that the steps you take today will echo through the year to come.

While this guide provides a strong starting point, every business has unique needs and challenges. If you find yourself seeking more personalized guidance or want to dive deeper into strategic planning for your specific situation, don't hesitate to reach out for professional support. Life Story Financial, specializes in helping small business owners, particularly women entrepreneurs, navigate the complexities of financial planning and business growth.

For more tips like these, download my free ebook series that covers debt management, growing your income to save more, investing wisely and retirement planning. To learn what it's like to work with a financial advisor for your business and personal financial needs, you can book a free call with Life Story Financial.