Ultimate Small Business Finance Spring Cleaning Checklist

Now that tax season is behind us, small business owners have a fresh perspective on their company's finances. With the books closed on the previous year, it's the perfect time to take stock and get your business finances in order for the rest of the year. Organizing your records, re-evaluating your practices, and preparing for the future can help set you up for success.

While filing (and paying) taxes may have been top of mind the last few months, now is a great opportunity to turn your attention to some small business spring cleaning. This checklist outlines 10 ways self-employed individuals can reflect on the previous year and set themselves up for the months ahead. From tracking down expenses to planning for next year's taxes, these steps will help you get your small business finances in order after tax season.

10 ways to spring clean your business finances after tax season is over

While the stress of tax season may be behind you, taking a little time now to review your business finances can pay off down the road. By getting organized and preparing for the rest of the year, you can start the new season stress-free, ready to uplevel your business for 2024.

Implement a better expense tracking system

If you are planning on deducting business expenses on your tax return, you likely know you need documentation showing the amount, date, merchant name, business purpose, and receipt for each item. And just how long it took you to track all that down when prepping for filing your taxes was probably telling.

Do you have a system for keeping track of your business expenses throughout the year, or did you let those receipts pile up in your inbox or the shoebox by your desk? Implementing a more efficient and organized expense tracking system can save you time, reduce stress, and maximize your deductions for the next tax year.

Make it a habit to regularly review and categorize your expenses throughout the year, rather than waiting until next April. If you’re not working with a bookkeeper, make sure to set aside time each week or month to go through your bank statements, credit card statements, and your payment apps, ensuring that you've accounted for all business-related expenses. Or, sign up for a business bank account like Found with built-in expense tracking tools to stay organized. 

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.

Estimate your 2024 income

Now that you've filed your 2023 taxes, you likely have a clear picture of your total income for the previous year. This information is crucial for setting accurate quarterly estimated tax payments for 2024.

As a self-employed individual, you don't have an employer withholding taxes from your paychecks. Instead, you're responsible for making quarterly estimated tax payments throughout the year based on your projected annual income. Looking back at your 2023 income can help you estimate a more precise figure for 2024.

Review your 2023 tax return, bank statements, invoices, 1099 forms, and any other records of the payments you received for your goods and services. Tally up all sources of income, including cash, online platforms like Etsy or Upwork, and payment apps like Venmo or PayPal. This total will serve as a baseline for estimating your 2024 income.

Keep in mind that your income may fluctuate year-to-year, so you may need to adjust your estimates periodically. But having an accurate starting point from your 2023 financials will help you avoid underpaying your quarterly estimated taxes, which can result in penalties and interest charges from the IRS. 

Revisit your invoicing system

Did you spend too much time tracking down outstanding invoices at the end of the year? Now’s a good time to revisit your invoicing system. 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 have to report that income on your 2024 tax return, not on your 2023 tax return.

Not only does it complicate your cash flow and accounting, but constantly following up with clients with overdue invoices takes up your valuable time. Now is a great time to review your client contracts and relationships. Which clients consistently pay on time and which ones regularly delay payments? It may be time to revisit your contract with those who have a history of late payments and adding a late payment fee or making the difficult decision to drop them altogether as a client.

Review your tax filing method and make any necessary changes  

Now that tax season has passed, it's a good time to reflect on your tax filing experience and consider if your current method is still the best fit for your business. Consider asking yourself the following questions:

• Did you feel well-prepared and organized, or did you scramble to gather everything you needed at the last minute?

• Were you confident in your ability to maximize deductions and minimize your tax liability, or did you feel uncertain about the process?

• Did you have access to the support you needed, or did you feel like you were winging it?

Based on your answers, consider what changes you can make to improve your tax filing experience next year. If you found the process stressful, confusing, or time-consuming, it may be worth hiring a Certified Public Accountant (CPA). If you aren’t already working with one, you’ll want to start reaching out as 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.

In the meantime, start setting up systems to help you keep track of your financial records, receipts, and income and expenses throughout the year, so you're not scrambling to find everything come tax time. By taking proactive steps now, you’ll hopefully have better answers to the questions above next year!

Strengthen your 1099 contractor relationships

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 you also know there are tax obligations. Hiring 1099 contractors and freelancers can take time and know-how, but is well worth the investment. It’s crucial to make sure you’re paying your freelancers throughout the year to keep those relationships strong. Here are some things you can do:

• Stay current on payments: In the same way you like to be paid on time, so do your contracts. Make sure you’re paying your freelancers on time.

• Be a good communicator: Keep the communication channels open by offering feedback and responding quickly when needed. 

• Plan for upcoming projects: If you think you’ll need more help from your current freelancers in the coming months, reach out to them now to get the conversation started and start budgeting for those projects now. 

• Prepare for future tax obligations: While the deadline for issuing 1099-NEC forms to your contractors for the previous tax year is months away, it's never too early to start preparing for the next tax season. Collect W-9 forms from any new contractors you work with (or those you still haven’t gathered) and start tracking those payments.

Add important tax dates to the calendar

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

Did you have sticker shock when it came time to look at everything you’d paid in taxes last year, or worse, when you had to make the final payment? 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, especially if you need to make adjustments. 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.

Note: Found partners with various providers to enable you to compare offers from participating institutions, such as lending and insurance providers. Found is not a lender nor an insurance provider.

Familiarize yourself with important tax changes

The U.S. tax system can be so confusing to navigate that it’s almost comical, especially for 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. 

The IRS regularly updates its website with critical changes that may affect your tax filing. Consider signing up for e-news subscriptions based on your interest and business type. You can also find other tax professionals who use their social media platforms to educate their audience about tax changes.

Plan and budget for necessary business purchases

As you move further into the year, now’s a good time to look at upcoming business needs and make a plan for any necessary purchases. While end-of-year sales may have passed, there are still plenty of chances to find deals and discounts on things like a new computer or business vehicle. As an added bonus, you might even have received a refund to help you make that purchase.

Even if you don’t need to pull the trigger right now, you can start saving a little bit of money each month. If you use Found, pockets make it easy to turn short-term income into long-term savings. You can create a custom pocket and automate recurring transfers to your pockets, or instantly move money when you want. It’s a great way to slowly build up a reserve before making a big purchase.

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.

Disclaimer: The information on this website is not intended to provide, and should not be relied on, for tax advice.

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