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This episode is brought to you by Progressive Insurance. You chose to hit play on this podcast today. Smart Choice make another smart choice with Auto Quote Explorer to compare rates from multiple car insurance companies all at once. Try it@progressive.com Progressive Casualty Insurance Company and affiliates not available in all states or situations. Prices vary based on how you buy. Welcome to the Candy Valentino show, the podcast for founders, investors and entrepreneurs where we have honest conversations about what it takes to grow your business, build more wealth, and create financial freedom.
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Hey guys, welcome back to another episode of the show. Thanks for tuning in with me today. And as we are winding down this year, I wanted to talk about something that's critically important on how to finish your business year strong and how to set yourself up for success in the upcoming year. I love this time of year. I know most people love it because of Christmas and lights and all the holiday traditions and yes, that's true. But I also love all of the things that you have to do to wrap up and close down your year. And I guess because I've been doing it for my entire adult life, it is something that I have really come to look forward to. So in today's episode, I want to talk about how to close down your year and how to set your new year up for success. We're gonna talk about specific bookkeeping and tax strategies that you can leverage, as well as an eight part step by step guide. It's gonna go super fast of what to do, and the last one is critically important because I see so many people forget to do this and they end up paying way more in tax than they need to. So let's jump into it. So if you ever hear me use the term closing the books or you hear that used, it really just means that all of your financial transactions for the year are wrapping up. Now, this is obviously assuming that you're on a calendar year and not a fiscal year, but this is making sure that everything is consolidated, everything is reported, all of your income and expenses that were generated throughout the year, your profit and loss statements are all accurate. Really making sure that you understand what these figures are and also ensuring that you don't have this year's numbers carrying over into the new year, which could potentially alter an accurate accounting picture. And if your accounting and your bookkeeping isn't accurate, then you may pay too much in tax or you may miss something that you could be leveraging, like maybe maximizing your investments at the end of the year or doing something different next year. So entrepreneurs and small business owners really need to use this time to review information, to understand the health of your business, to really get a good financial understanding of what's happened. That's what's going to set you up for success in the new year. Because once that clock strikes midnight, really the only thing you can do is back date checks that you want to send. But for the most part, I mean, you really can't do anything. You can't add new sales deposits on January 1st and try to get them to count for December 31st. You have to make sure that all of this is done ahead of time. So again, let's jump into these eight quick steps. Number one, make sure that all of your projects, your orders, any collections that someone owes you money, make sure that you are closing out and ensuring that everything is invoiced and all the income is recorded. For those who haven't yet paid their invoices, make sure that you call or send out reminders and get payments in as soon as possible. This will give you time to determine if the payment is coming, if you have the ability to write it off, if it's going to be a loss, if you want to deflect it into next year. And making sure that you're maybe not depositing that check until January 1st because you made so much money this year that you don't want to add to your taxable income. Making sure that you invoice and collect on the orders, the invoices and the bills that you have outstanding is really important. And then on the second flip side of that, number two, make sure that all your contractors, your vendors, employees, all bills are paid and up to date. And make sure this is a little bit of an advanced strategy that if you are looking to reduce your taxable income, is there a way that you want to pay invoices in advance? Do you want to double up on a bill? Do you want to drive down your taxable income so that you're not paying more because you had a really great year. This is the time that you can do that before you close out your year end books, paying your vendors, your contractors, employees, and any other financial obligations or bills, making sure that you close that out in this year and double if you want to extend or if you have the opportunity to do that in order to reduce that taxable income. And of course, number three, make sure that you have all of your business expenses recorded and categorized. Now, if you're doing bookkeeping with a pro throughout the year, this is obviously something simple that you already have. But if you don't if you're a smaller size business and this is something that you deflect, you want to make sure that by the end of the year you are taking a look at that. I know when I had a smaller business, if I let this roll into the the next year, I have no clue what those are expenses are all about. I can't remember them. More months have gone by so it' lot more complicated. It's really also important to make sure that any of your business and your personal expenses are kept separate and review this to make sure that nothing crept in. I mean it is really easy when you're wearing all the hats and spinning all the plates to grab your personal card or to somehow mix your business and personal expenses, taking a look back and making sure that that didn't happen. And if it did that you make sure to communicate that with your bookkeeper or your account so they understand how to categorize those expenses so that you aren't missing any and paying more than you should or using after tax dollars for pre tax expenses. So this is really important. Number four, make sure that your bank accounts and all of the other accounts that you have are reconciled. Make sure that your income and your expenses are up to date and that they match. This is an important thing. I can tell you. Gosh, I think there were four moments that I can of off the top of my head that end of year I would be sitting there with Jerry, we'd be going through everything sometimes Beth, depending on the year and we'd be looking at like what happened, what's going on. And in my book, the 9% Edge, I talk about one of these exact situations when we were trying to close the month and we realized that we were really short. I wish I could tell you that that was the only time this happened, but it actually happened several times. And the longer you're in business and the, the larger your team is and the more complex your business is or becomes, then you're going to have these times where this can happen to you too. And so I've been stolen from, I've had embezzlement, I've had flat out theft, you name it. This is really important this time of year while it's fresh in your mind to go back, making sure that everything is reconciling, making sure that wherever your income and your sales are coming in, whether that's a point of sale, a CRM, some other software like E. Com, you want to make sure that you are looking at and making sure that those sales numbers are reflecting in your bank account or your credit card statements or your merchant processor and that they are balancing. Because if not, before you run into a new year and bring in old problems into a new year, you want to make sure that you're double checking everything. This is a really important time for this and oddly enough, November and December is typically when I caught all of my thieves, so hopefully you don't have but this is a really important habit to get into.
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This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try it@progressive.com Progressive Casualty Insurance Company and affiliates Price and coverage match Limited by state law not available in all states.
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Episode is brought to you by Google Gemini. With the Gemini app you can talk live and have a real time conversation with an AI assistant. It's great for all kinds of things like if you want to practice for an upcoming interview, ask for advice on things to do in a new city or brainstorm creative ideas. And by the way, this script was actually read by Gemini. Download the Gemini app for iOS and Android today. Must be 18 plus to use Gemini Live.
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All right, number five payroll taxes. Oh my gosh. Before you close your books, make sure that your monthly and your year end payroll expenses match. Make sure your 941s are done. Make sure everything is good. Make sure that you reconcile this before you file income taxes for the year. And obviously if you have any questions about this, just reach out to whoever processes your payroll. Make sure to talk to them just to make sure. Everything is done when you delegate. I think there's this misconception that when you delegate things to a bookkeeper or an accountant or payroll service that you can be totally hands off. But it's still your name, it's still your business that is attached to those payroll taxes that are attached to your income taxes, that's attached to your books. So you want to make sure that you are verifying. I always say trust but verify, especially when it comes to finances. You want to make sure that you are being proactive in this one business acumen so that you're making sure all of this gets handled because honestly, it's your butt on the line if it doesn't. So check your payroll taxes. Make sure everything is kosher there. All right, Number six, verify employee and independent contractor information. This is really key because what are you going to be doing in just a few weeks? You or your bookkeeper or your payroll provider are going to be sending W2s and 1099 forms very soon. So making sure that you have the correct forms in the employee or in the contractor's file. Make sure that you have the up to date mailing information so that when you're mailing their W2 or their 1099, that it's going to the right place. So make sure that you have those W4s or W9s on hand. And this brings us to number seven, which is the least favorite that Candy Valentino enjoys on this list. Whew. This is really bringing me back. It's conducting a physical inventory check. If you sell products, whether that is in a physical store or even online. Making sure that you have your final inventory count the day that you close your books so that you can record that inventory at the beginning of the year, that you can make sure that all of that matches. And it's super important for your tax professional to make sure they understand that so that they can properly report it and identify what inventory you have on hand. Definitely not my favorite. Let's get into one I enjoy far more, which is number eight, running your financial statements. Make sure that if you are not doing your State of the Union every single month, which you should be. I talk about it in all of my books and in my most recent book, the 9% Edge Planner, which is your guide to your wealthiest and most successful quarter yet. I talk about the state of the union, exactly what you need to do. But if for any reason you haven't developed that habit yet, make sure that you are doing it at the end of the year, looking at your P L, your income statement, your cash flow statement, your balance sheet, to get a good understanding of the financial position that your business is in. And remember, if this feels overwhelming and daunting, like you are not alone and you don't have to do it alone, you can outsource to a professional. You can get accounting software to help with this. And all of those things are expenses that are deductible as well. So another thing you want to make sure that you're looking at right now, this is kind of like a little a bonus, if you will. But this is part of the state of the union. And this is something that you do quarterly or annually on top of your normal reviews, is making sure that you go back through your expenses through the year, do an audit, your subscriptions, the services, the vendors that you work with, the memberships that you have. What are some of those things that you're seeing spending money on, the tools that you're paying for, like software, what's working, what can you cut, and what maybe can you downgrade? I actually worked with someone not that long ago, at the beginning of the year that was bleeding money and really went through this line by line and did exactly what I told her to implement. And lo and behold, she found about $60,000, $60,000 of profit. Imagine what your profit margin is, how much money you actually have to bring in, how many sales you need to make in order to thousand dollars that you're just spending on things you don't need. So she went through line by line and was able to cut $5,000 a month, which totaled about $60,000 in profit. The things that she was signed up for that she didn't necessarily even need. So once she cut those, she realized that she could do without them. And so I'm sure there's a lot of things like that in your business that can really add up over time, Things that could be draining your profit, things that we can cut, and then we can maximize your bottom line. All right, so we went through basically this overall checkl close your year. And I want to talk about something that's a little more advanced and something to think about as phase two of your year end close. All right, number one, I alluded to it in the beginning, which is this advanced technique of making sure that you understand where your taxable income is for the year, where your sales are, what your bottom line looks like, what your net is, so that you can decide if you have sales and income coming in from now through the end of the year. If this is even option for you, the way your business is structured. But if you want to deflect some of that income and push it in to 2025, meaning that maybe if it's a check, you're not cashing it, or if there's some sort of payment, you're not necessarily depositing it quite yet. So there is a way that you can deflect and push some of that income in depending on how your business is operated. Obviously, if you're just using credit cards fully for your payments, then that's a little bit complicated to do. But if you're in a position that you can do that, that's one. The second way to reduce that so that you can reduce the amount of tax that you spend is to amplify your expenses, like I shared, where you add additional payments and you create additional expenses in this tax year so that you are pulling them from the 2025 tax year, which will overall create more deductions so that you pay less in tax. The third part of that is accelerating your deductions, meaning if there are business expenses that you are thinking of making, maybe office supplies or a new printer or a copier or whatever it may be, can you increase those expenses? Can you prepay for your rent or your insurances or send extra to your utilities? Is there anything that you can buy now that you're potentially going to buy in the first quarter or second quarter of 2025? Can you bring it into this tax year so you can reduce your overall taxable income and spend less in taxes? That would be the next part of this. And then we've got one more thing we want to cover, which is to think about your retirement account. You can save on taxes while securing your financial future and paying into retirement with investments like IRAs and SEPs and 401ks. Now, you don't need to make those contributions by the end of the year, but this is a great time to think about them. And again, if all of this feels very overwhelming, you aren't alone. You can always get expert advice from a tax pro. They can help you identify any additional deductions or credits that you can claim, like the Research and Development Credit or the Work Opportunity Tax Credit to reduce your overall tax bill. And if you're working with someone good, they should have already given you a tax estimate so that you have an idea of where you are going to sit at the end of the year so that you can decide if you are going to give yourself a bonus. Depending on how your business is structured if you want, adjust your salary, if you want to take advantage of any section 179 deductions, or if you need to plan to adjust your estimated taxes because of any underpayment penalties that you want to avoid. But my hope is that if you don't already, you start to look forward to this time of year, and not just for the Christmas cookies and all the holiday traditions, but because it really gives you an opportunity and the timeline forces you to really get in and start to understand the language of your business, numbers, data, metrics, so that you can start to plan for the next year. And the only way that you can start to set goals and plan your next revenue benchmarks for the new year is to really audit and reflect, to evaluate the current state of your business, understand what went right, understand what went wrong and what adjustments that you need to make in the upcoming year. And if you didn't see it on social media already, I just dropped my third book, the 9% Edge Planner, which is a quarterly guide to help you maintain clarity, stay focused, and keep you on track for success. Because us entrepreneurs, we always are great at ideation, but sometimes we fail at implementation and execution. We often overestimate what we can do in a year, but we underestimate the amount of work that it would take to achieve that. So this is a 90 day quarterly guide, daily, weekly, monthly and quarterly goal setting to keep you on track and set you up for 2025 to be your best year yet. You can go to Amazon.com or wherever books are sold and buy your copy of the Planner. And next week I am dropping a full episode in the reverse of this. So this was all about how to close out your year. Next week we're going to talk about how to set up your year for success. I'm going to go into the research that we did for the Planner, as well as a key framework to reverse engineer your goals and to break them down so that you can not just make your success possible, but that you can make it probable and start to stack the odds in your favor. I'm super pumped about it. Implement what you learned today and I promise your business will change and it will set you up for success to plan out your next year. All right, guys, thanks so much for tuning in and spending this time with me today. We'll see you next time. Hey guys, thanks for tuning in to this episode and if there was something that you loved or you had a specific takeaway, share it and tag me at Candy Valentino. And if you haven't already, grab a copy of my latest book, the 9% Edge Life Changing Secrets to create more revenue for your business and more freedom for yourself. You can pick it up anywhere books are sold, Amazon, Barnes and Noble, or your local independent store. And once you do, head over to 9% edge.com and claim $1,500 in pre order bonuses, including a chance to join me on this very show. Thanks so much for tuning in and spending this time with me today, guys. We'll see you next time.
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Named one of the best personal finance podcasts, the Stacking Benjamin show with Joe and his friends makes financial literacy fun. Draymond Green has a podcast. He was asking Mark Cub why at the beginning of 2024 Cuban sold a huge part of his company.
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Did you see how much money I got? I'm sure there's a more graceful answer than that, but dude, I bought it for 200 million and sold it for 6 billion.
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That much more graceful than that. Find out more by searching the Stacking Benjamins podcast wherever you listen.