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Are You Ready for the Year Ahead? Inventory, Business Strategy and Tax Considerations to Keep Your Shop Running Smoothly By Tracy Allen WITH 2014 COMING to an end, you're probably multitasking like crazy—generating holiday sales, closing out the year, tying up loose ends, and if you're lucky, squeezing in some time off. The end of the year is also a perfect time to examine your cur- rent business goals and plans, and determine if any changes need to be made for the year ahead. Re-Evaluate Your Goals A lot can happen in a year. Circumstances change; incidents occur. From the economy to world events and even the weather, external forces can have a significant impact on your business. It's import- ant to take stock of changes that need to take place, as well as which processes and procedures are working well. You may need to shift your strategy in order to continue growing and succeeding. Following are the basics of what you should do to assess and prepare for the coming year. Take Stock of Inventory Ending Inventory is the unsold merchandise your business has on the shelf and in the stockroom at the end of your accounting year. Beginning Inventory is this same number on the first day of your subsequent accounting year. Ending inventory isn't just necessary to ensure you have enough product for holiday demand. First of all, it illuminates the truth, really, allowing you to determine which products are selling and which are not and thus letting you know if it's time, perhaps, to consider redesigning or retiring old or potentially outdated menu items and retail offerings. Second, it helps you identify potential internal security issues and inventory-control problems. If a significant amount of inventory is missing, there's a snag somewhere. It's either in mismanagement or theft (employee or nonemployee), both of which are problems in need of swift attention. If you don't have crime insurance or employee-dishonesty insurance, now may be the time to get it, especially if you have one or more high-volume operations. For your tax records, inventory needs to be listed with the appro- priate value. Inventory is marked up for sale, so when recording it at the end of the year, the market value should be used. When you're counting your goods, you'll need to tally each SKU separately. These differences will be important when adding up overall costs. Inventory can be done periodically, but perpetual inventory counts are preferable. Usually, perpetual inventories are kept by using software that tracks your inventory numbers and adjusts them whenever sales are made or new goods are stocked. This will vastly speed up a year-end count as you already have a start- ing record. Some inventory management tools will even let you export and print your records so you have a handy sheet to start with. This changes the job to inventory reconciliation, rather than doing a new count from scratch. Also, dedicating time solely to taking inventory puts you in the right mindset. Research shows that our brains probably can't process two tasks simultaneously, so cut out all distrac- tions. Pick a slow sales day or dedicate scheduled hours each day until it's done. Prepare for Tax Time As a café owner-operator, you work hard to generate a profit each and every year. Unfortunately, as profits grow, so does your poten- tial tax liability. While a profitable operation will always incur tax at some level, year-end tax planning is an effective way to minimize your total tax bill. With tax season nearly here, take the time to put your records in order and balance your books. It's a healthy process that will help you start the new year with clarity and focus. You should also consult with an accountant to make sure your tax strategy is the best course of action for your business. The right tax strategy can help you save a lot of money, while the wrong one can prove costly in penalties and fees. Of course, your year-end financials are useful in determining if you had a profitable year, and how you might change things moving forward. This year-end accounting checklist should include recon- ciliation, appropriate inventory costs, assets, and debts. t3FDPODJMJBUJPOThe most important item on your end-of-year accounting checklist is reconciliation. This includes making sure bank accounts match up to year-end bank statements, so you can identify profits and losses and make sure all money is accounted for. Another part of reconciliation is making sure all employee withholding is accounted for and deposited with the federal and state governments. t "TTFUT Take inventory and make sure your assets are cor- rectly valued. The value should reflect any depreciation that has occurred over the year. If any assets have been sold this year, the profit should be noted and the asset removed from the books. If any depreciation occurred before the sale, that should also be noted in the books. t%FCUT Despite their nagging presence, they help provide the 80 barista magazine