The new year is a time to celebrate and set goals. Lots of people make personal resolutions when the clock strikes midnight, but what about making sure your business gets off to a healthy start in 2018?
The end of year can be a stressful time. There are numerous back-office matters to shore up, and all kinds of potential pitfalls along the way. Here are three simple steps to help your business save money at end of year:
1. Watch out for hidden fees
Getting leaner and more efficient is no longer a to-do–it’s a must-do. Many small businesses use technology providers to streamline their payroll, accounting, taxes, benefits, and compliance. But be wary of the hidden fees some providers charge. Read the fineprint and ask questions.
Many providers will bill for year-end W-2s and 1099′s, new hire reporting for employees and contractors, activation fees, sick and vacation time tracking, and corrective payroll runs, among other things (to be transparent: at Gusto we use flat-rate pricing determined by the number of employees).
2. Keep track of expenses
About one-third of businesses get fined every year for doing payroll incorrectly. That adds up to about $5-6 billion in penalties annually. One common mistake is the mismanagement of expense tracking, particularly when it comes to receipts. They can become faded, unclear, or lost if they’re not managed properly–and the impact can be quite meaningful around tax time.
Without proper expense management, you may miss expenses on your tax return, which means fewer deductions. You also could miscategorize an expense, which could trigger an audit. Consider using an automated service provider to track your expenses. With providers such as FreshBooks, Expensify, and Xero, you can import prior expenses from your credit card or bank accounts.
3. Ask accountants about value-based pricing
Many business owners use accountants for their year-end needs. Traditionally, accountants bill hourly. Everything usually goes smoothly and your final pricing will be within budget. However, if an unexpected issue arises and more time is needed to complete the work, the price can rise dramatically.
Ask your accountant about value billing, which is an upfront rate depending on the level of service. More and more accountants are adopting this method of billing. The most basic value billing options usually help with bookkeeping and tax preparation. That might include a specific amount of phone and email support per month. As you slide up the scale, accountants also can offer software consultation, more phone and email interactions, and detailed business analysis and financial planning.
The end of year is a busy time for businesses. And with so much going on, it can be easy to gloss over crucial items. But knowing where the pitfalls are–and how to avoid them–is an important step to make sure your business stays on the path to success in 2018.
This story was originally published in Inc. Magazine.