Your Ultimate End-of-Year Business Checklist

The year is quickly—finally—coming to a close, which means it’s time to start getting your affairs in order for the new year. Organizing your business records, re-evaluating your business practices, and preparing for the upcoming tax season can help you set yourself up for success.

How to prepare self-employment taxes and start the new year strong

While filing taxes may not be top of mind leading into the holidays and New Year celebrations, dedicating a little time now for tax prep will prevent a painful scramble come spring. Start your new year stress-free and organized with this checklist. Here are 10 ways to tie up your business year with a bow.

Track down business expenses

If you’re planning on deducting business expenses on your tax return, you’ll need documentation showing the amount, date, merchant name, business purpose, and receipt for each item. If you’ve been tracking all of this information for your business expenses in one place throughout the year (like an expense tracking app, a spreadsheet, or a handwritten ledger), you likely have what you need. 

But if you let those receipts pile up in your inbox or the shoebox by your desk, you have some work to do. Here are a few places to start to track down those business expenses: 

• Bank and credit card statements: Review monthly statements which list all purchases made over the past year. Since most apps only show recent transactions, statements give fuller history. Note work-related items not previously tracked.

• Calendar appointments: Do you travel often for work? Use your work calendar to jog your memory on where you traveled and met clients as hints of potential untracked deductions like travel, meals, parking, etc. If you realized you had a client meeting in September, go back to your statements to make sure you didn’t miss anything.

• Payment apps: If you’re making any work-related purchases with payment platforms like Venmo, Square, or PayPal, go through your account history to find a record of any purchases that you made that may not be reflected in your bank statements.

When filing as a sole proprietor, you will report your business's income, expenses, and net profit on the Schedule C tax form as an attachment to your personal tax return. All those categorized expenses get entered line-by-line and help lower your annual income tax obligation. Spending time tracking and categorizing expenses directly benefits your bottom line by maximizing deductions! 

If you work with an accountant or bookkeeper and use Found for your business banking needs, you can easily collaborate with your accountant, right from your Found account. With accountant access, your bookkeeper or accountant will be able to view and edit your account activity, categorize your expenses, and access your Schedule C form.

Calculate your total income

When you’re self-employed, there’s a good chance your income comes from a few different sources rather than one employer. If you haven't closely tracked earnings all year, now is the time to tally up all payments received in 2023 for the goods and services you provided.

Pull records from bank statements, PayPal, Venmo, Etsy, UpWork, Lyft, Doordash, or other platforms used to collect payment from customers. 

Tally up invoices, 1099-NEC forms, and any cash payments–yes, even cash. Essentially, any form of compensation you received in exchange for your professional work and offerings is considered taxable income that must be reported. Thoroughly tracking every income source avoids tax surprises or issues down the road.

Follow up on outstanding invoices

Still waiting on outstanding invoices from work that you did this year? Now’s a good time to follow up with your customers to make sure they pay—ideally before January 1. Most self-employed people use the cash method of accounting, which just means that you report your income as it’s paid, not when the work was performed. For example, if you run a cleaning business, and cleaned a house in December of 2023, but weren’t paid for it until January 2024, you’d report that income on your 2024 tax return, not on your 2023 tax return.

Unless you have a business reason for deferring income to the following year, you’ll want to make sure you receive payment for your work before the year ends, so all of your expected income and expenses are reported on the same tax return.

Choose a tax filing method

Even if you aren’t quite ready to file your taxes yet, choose your tax filing method and start gathering everything you need to make the process as painless as possible. You have a few tax filing options available to you, including:

• E-filing your taxes online using software or a website: This convenient option allows you to input your tax information electronically and submit everything online. Software guides you through the process step-by-step. Business bank accounts like Found make this even easier by auto-generating your Schedule C form, so your financial information is already on hand.

• Hiring someone to do your taxes for you: A tax professional like a Certified Public Accountant (CPA) or enrolled agent can prepare and file your taxes for you. This saves you time and work, and helps ensure accuracy and maximized deductions.

• Doing your taxes by hand using IRS tax forms: If you're a pro at taxes or want to DIY, you can complete paper forms and mail them in. This requires closely following complex instructions and calculations yourself. We generally don't recommend this unless you are very tax-savvy.

If you want to hire a CPA to prepare your taxes and you aren’t already working with one, you’ll want to start reaching out now. Many in-demand CPAs cap the number of clients each tax season. The longer you wait, the harder it will be to find someone accepting new clients. Tax time is already stressful enough, so don’t add to the stress by waiting until the last minute. 

Pay your contractors

If you’ve worked with 1099 contractors, you know it’s a fantastic way to get expert help and boost productivity in your business. But did you also know that there are tax obligations? Hiring 1099 contractors and freelancers can take time and know-how, but is well worth the investment. In the same way you’re working hard to get your end-of-year finances in order, be sure to pay your freelancers. Make sure you’re settled up on any outstanding invoices you owe.

In addition to making sure everyone has been paid, you’ll also need to be prepared to issue 1099-NEC forms, where necessary. While the deadline for sending the form to your contractor and filing it with the IRS isn’t until January 31st, it’s good to have it on your radar.

Add important tax dates to the calendar

Surprises may be welcome during the holiday season, but when it comes to taxes, most small business owners would prefer to be in the know. From filing federal income taxes to paying estimated taxes, staying on top of these deadlines will prevent last-minute panic. 

Get your pen and planners ready, and mark down these 2024 tax deadlines that every self-employed person needs to know.:

• January 16, 2024: 2023 fourth quarter estimated tax payment is due

• January 31, 2024: Deadline to issue 2023 1099 contractor forms

• April 15, 2024: Deadline to file your 2023 personal tax return (or request an extension)

• April 15, 2024: First quarter estimated tax payment is due

• April 15, 2024: Last day to make 2023 retirement contributions 

• June 17, 2024: Second quarter estimated tax payment is due

• September 16, 2024: Third quarter estimated tax payment is due

• October 15, 2024: Deadline to file your extended 2023 personal tax return

• January 15, 2025: Fourth quarter estimated tax payment is due

Remember: Filing an extension does not give you more time to pay your taxes—it only gives you more time to file.

Make a savings plan for taxes

A lot of freelancers will have sticker shock when it comes time to pay those quarterly estimated taxes. So while having the dates marked is important, you also want to make sure you have the money to actually make the payments when the deadline rolls around. Since you’re responsible for paying quarterly estimated taxes throughout the year, it’s a good practice to save throughout the year, too. 

But with unpredictable income streams as a freelancer, figuring out how much money to set aside can be a major challenge. A good rule of thumb is to set aside 25-30% of your income for taxes, but if you’re unsure, always err on the side of overpaying. Why? Underpaying comes with a cost. As of Oct. 1, the Internal Revenue Service will now charge 8% interest on estimated tax underpayments, up from 3% two years ago. 

If the math feels intimidating, Found’s beloved auto-save feature takes the guesswork out of taxes. If you’re a Schedule C filer, Found’s auto-save feature will set aside money for taxes every time you get paid, and automatically allocate those funds to your Taxes pocket. Taxed as an S-Corp? You can choose the deposit allocations for your Taxes pocket to build up your tax savings all year long. Bonus: If you like the auto-saving feature of the Taxes pocket, you can create custom pockets to organize, budget, and save with complete clarity.

Take care of the back-office business tasks

Managing the administrative aspects of operating a small business may not be glamorous, but it’s critical for protecting yourself legally and financially as a solopreneur. If you’ve breezed through some of these tasks, use your downtime to check some important back-office to-do’s off your list:

• Apply for an EIN: Using an Employer Identification Number (EIN) from the IRS protects your Social Security Number and helps with keeping personal and business finances separated.

• Register as an LLC: Your business structure affects your tax obligations and paperwork requirements. You're automatically a sole proprietor by doing business and collecting income, but creating a Limited Liability Company (LLC) better shields personal assets from any business legal action taken against your company. The LLC structure also provides tax flexibility as your business evolves. Now’s a great time to consider registering as an LLC.

• Get business insurance: Small business insurance is designed to cover potential risks and challenges your business might face. Take some time to understand your business risks and look into policies and providers.

• Set up a business email address: If you’ve been using a domain-based email address for running your business (like @gmail.com or @mac.com), now’s a great time to take it up a notch. Setting up a business email address with your branded domain is simpler than it seems and will help bolster credibility with clients.  Be sure to set up any email forwarding and update your contact information on your website or business cards.

These back-office tasks may feel like busy work, but consider them the gift that keeps on giving: these one-time tasks will give you security, credibility, and peace of mind all year long.

Familiarize yourself with important tax changes

The U.S. tax system can be so confusing to navigate that it’s almost comical, especially for business owners. Did you know that only 22% of self-employed people feel confident in their ability to claim all the right deductions and minimize their tax bills? Knowledge is power, and changes in tax law can affect your business. Now’s a great time to review important tax changes to see what might affect your business ahead of tax season. 

Make any necessary end-of-year purchases

The holidays often bring sales on everything from technology to office supplies. As you’re prepping for the new tax year, look at any business items you may need to purchase soon and consider grabbing them on sale for extra savings. Just be strategic that you’re buying things you actually need and not making unnecessary impulse purchases for hollow deductions. Do your research, stick to your budget, and snag year-end deals only on what you were planning to buy anyway.

Make next year easier with Found

Taxes can be stressful for self-employed people, but a little effort now can save you a lot of pain later. If you’re ready to simplify your small business finances, make next year even easier by signing up for a Found account. 

Built specifically for freelancers and the self-employed, Found makes it easy to manage your banking, taxes, bookkeeping, and invoices. With automatic expense categorization, tax savings accounts, and real-time tax estimates, it’s easier than ever to manage your finances and prepare for tax season. Smart banking and tools that will save you time and money? Yes, please. Get started for free today.

*Filing taxes through Column Tax is free for annual Found Plus subscribers. Column Tax filing available for Schedule C filers only."
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Disclaimer: The information on this website is not intended to provide, and should not be relied on, for tax advice.