Getting Ready for Year End: Strategizing Q4 Revenue & Expenses

Getting Ready for Year End: Strategizing Q4 Revenue & Expenses

A good fourth quarter just might be the most important win of your business year, because it demonstrates that you know how to implement the right strategies to succeed when and where it counts.

Reviewing this year’s financial records, as well as the goals you made at the start of the year, is a great place to begin gathering the information you need to build the right strategy for the end of the fourth quarter.

Do you hope to show profitability or growth? Do you have investors or stakeholders who are expecting you to hit certain metrics? Did you have a challenging first quarter and do you want to balance it with a big final quarter, or do you want to save those sales for a strong Q1 in 2022? What insights can you pull out of the past year to strategize setting new goals next year? Depending on your situation, here are our tips for making the most of your final weeks of the year.

No matter your situation, there are a few things you should double check and remember.

  • If you have a single member LLC but have elected as an S corp, make sure to check with your CPA to make sure you have taken the appropriate salary for the year. If not, you can still change your salary over the next few weeks as needed.
  • The holidays is a great time to be generous:
    • If you are in the position to do, charitable donations can make a big difference in your community, and they will reduce your taxable income, helping reduce the tax bill you’ll have to pay come April
    • Also, it can be a great time to be generous with your team. Whether $50 or $500, a holiday bonus can go a long way to keep your team happy, especially critical in this competitive labor market. But, remember, you must record these bonuses or gifts as income as part of your payroll system. Christmas gifts mean withholding taxes for both the employee and employer – so make sure you pay these through your payroll system, and not via cash! 

Strategies for when you’re ending the year with strong profits.

So, you’ve had a great year, and your profits reflect it. What strategies can you implement to reduce potential liabilities and secure conservative metrics before the next tax season?

Take the time to go back through your books and make sure you’ve taken advantage of tax-deductible expenses throughout the year. This is where detailed bookkeeping and implementing accounting technology throughout the year will pay off. Make sure you haven’t missed any valuable write-offs!

If you’ve accounted for all your tax write-offs, this may be the perfect time to purchase new equipment or restock inventory. Significant expenses will reduce your overall taxable income for the year, giving you much-needed new equipment or increased inventory, and importantly, relief on your forthcoming tax bill. Don’t buy equipment just to reduce your taxable income, however – these purchases should be purchases you are going to take on, regardless of timing. But, if you are going to spend the money, spending it in December 2021 vs. January 2022 means you’ll help reduce taxes you must pay come April 2022.

On the flip side, if you are experiencing high demand from your customers in this final quarter, can you defer some of that demand into Q1 2022? Having those customers purchase in Q1 2022 will help reduce your 2021 tax liabilities by reducing your income in 2021. Of course, you’ll still pay income tax on those sales, but by having a customer purchase occur in January 2022, vs. December 2021, you don’t owe Federal Income tax until April 2023 for that sale vs. April 2022 if that sale had occurred just a few weeks earlier in December.

Of course, pulling forward expenses and pushing out demand also impacts what your 2021 P&L looks like. So make sure your actions aren’t going to cause you to miss important revenue or profit goals.

Strategies for when you’re ending the year behind in profits.

What if you’ve reached the fourth quarter and your profit/loss balances don’t match the goals you set for your business at the beginning of the year? What strategies can you implement in the remaining weeks of this year to bring your profits up?

Before panicking, start by critically evaluating your annual numbers. How does this year’s fourth-quarter profit and loss statement compare with last year’s? How much more do you need to earn to meet your goals before the new year? Were the goals you set maybe unrealistic?

Once you have concrete numbers to work with, you can strategize ways to bring up your fourth-quarter profits much more efficiently.

Obviously, how you bring up profits at the end of the year will differ widely depending on the type of business you have, but some helpful questions to consider may be:

  • Are there unsold customers from earlier in the year you can follow back up with?
  • Are there ways to improve or change up your marketing strategies this holiday season? Would a sale drive a big increase in volume?
  • Do you have any stock surplus that you can strategically market and sell?
  • Are their proposals in the pipeline that you can push through before the end of the year?

Don’t forget to use the information you gather during this time to help you set the appropriate goals for the coming year. Take a moment to recognize sales trends in your industry, particularly if you have historically strong months or quarters. This can help you balance your annual budget and build sales strategies accordingly.

We may only have a handful of weeks left this year, but there are a lot of things you can do in a relatively short amount of time to finish this year well. Do you have questions about getting a fourth-quarter strategy in place? We can help.

Getting Ready for Year End: 1099 Prep

Getting Ready for Year End: 1099 Prep

Businesses employ independent contractors all the time, in multiple capacities. Perhaps you hired a freelance designer to create marketing materials for your business this year, or maybe you brought in an independent consultant to develop strategies to improve your operations. If you used a contractor or vendor this year and paid them $600 or more, you need to be prepared to issue them a 1099 tax form by January 31.

1099’s can be complicated and confusing, dreaded by employers and contractors alike. Even if you have experience with issuing or filing 1099s, you may have missed recent changes in tax laws that might affect you this year. Unfortunately, the consequences of failing to use 1099s properly can include fines and penalties, so understanding these complexities is essential. Here are some steps and considerations to keep in mind as you, the employer, prepare for the end of the year.

The first step is to figure out which 1099 form your contractor will need. As of 2021, there are 20 varieties of 1099 forms, but the 1099-NEC (non-employment compensation) form and 1099-MISC form historically have been the ones most commonly used for contract employees who were paid $600 or more during the year.

Use the Proper 1099 Form 

Why is this important to know? Until 2020, the 1099-MISC form was used to report payments to independent contractors and vendors for services rendered, but differing due dates created loopholes in the system that were being abused. As a result, beginning in 2021, the 1099-NEC was reinstated to report all payments to non-employed individuals. This covers nearly all contract/freelance work, with a few rare exceptions that may still require a 1099-MISC form.

Always consult a tax professional if you have any questions or uncertainties about which 1099 form you need to issue to your particular contractors and vendors.

Accurate Compensation Records

The next step is to ensure you have all the information needed before issuing 1099 forms to your contractors. Some important questions to consider are, do you have an accurate account of which contractors and/or vendors you used this year, and how much you paid each of them? Implementing a system at the beginning of the year to keep an accurate account of who you are contracting and how much you are paying them will keep you organized and on track when it comes time to issue 1099 forms.

Update Contact Information

Do you have up-to-date and accurate ways of contacting them? Sometimes contractors and vendors move locations or change their contact information. Fall is the perfect time to start making sure you have their up-to-date details, so your 1099 forms get to where they need to be on time (keep in mind that January 31 is the deadline for mailing 1099s to most taxpayers.)

This feels like the right time to re-emphasize the importance of implementing a system and process to keep an accurate account of all these details as early as possible. In today’s paperless, digitalized world, we love software like GUSTO that has digital payroll options for managing your contract employees Additionally, we use Track 1099 when it comes time to e-file on behalf of clients. Still, whether you choose to use the latest software or hire outside professional accounting help, the most important thing is that you have a process in place to ensure you don’t forget about your contract employees and vendors.


At System Six, we pride ourselves on staying up to date with the latest tools and technologies to help clients keep their books clean and organized all year long, setting them up for success during tax season and beyond. So, we focused year round on 1099s (collecting vendor information throughout the year, for example), but now that  it’s approaching year end, it’s your turn as well to prioritize 1099s!

Does the process of preparing to issue 1099s to your contracted employees confuse or frustrate you? Are you feeling overwhelmed about your 1099s?  We’d love to chat. Please reach out.

Conference Takeaways

Conference Takeaways

In October, I attended two different accounting conferences back-to-back – the first industry events we’ve been able to attend in the last 18 months! Meeting, networking and learning from so many great industry partners and experts was quite invigorating. Importantly, I also left the conferences excited about the continuous evolution of our industry and the opportunities it creates for System Six to continue to grow. Here are the main takeaways from Thriveal’s Deeper Weekend and Scaling New Heights.

Relationships Matter

The currency of our industry is shifting. While transactional services still underpin everything we do, clients more and more expect and need value-add advisory services. Clean books will always be the foundation of quality accounting, but the rise of cloud technology has led to endless integration possibilities, making transaction management less cumbersome than in years prior. So what does this mean for bookkeepers? We’ve got to continue to build and lean into our relationships as agnostic, trustworthy advisors. We’ve got to continue to educate ourselves on all the problems our clients are facing – not just their accounting challenges – so we can provide advisory services beyond just finance. So for System Six, in the coming months and years, we’ll be working on finding new ways to deliver value to our clients, whether through deeper financial advisory capabilities, additional support for HR management, or even technology advisory. Ultimately, we hope to continue to deepen our relationships with customers so that we may best serve them and enable their success. Building this deeper foundation of meaningful relationships rather than transactional services is the future of our industry.

Ever-Expanding Toolbox

Innovation is the heartbeat of the tech world. In every industry, new services, programs, apps, and vendors emerge every quarter. At these conferences, I had the opportunity to hear firsthand about the latest initiatives, features, and products heading to market. Some will provide healthy competition for some of our favorite vendors like Bill.com and Gusto, who themselves continue to improve. At the same time, others are finding success in filling niche spaces in security or uncategorized transaction automation. We will keep tabs on several vendors as they develop and expand so that we can provide the best service to our clients.

Quickbooks is Reinvesting

While Quickbooks is still our go-to cloud-accounting software, they’ve gotten flack across the industry in the past few years. Whether from the launch of QB Live, a competitor to many bookkeepers, or because of less than satisfactory customer service, the ecosystem has been frustrated with them of late. Fortunately, they are focused on doing right. They are reinvesting in their accounting partner community by overhauling their customer service, reducing wait times, and providing robust training for firms. We look forward to continuing our partnership with Quickbooks and appreciate their efforts to better serve firms like System Six.

Great Industry Ecosystem

The business world often gets a bad wrap as having a cut-throat, competitive culture, but I was pleasantly surprised otherwise. Everyone I met was friendly, encouraging, and supportive. The atmosphere was full of camaraderie and different individuals championing one another. Rather than approaching the industry with a scarcity mindset, other firm owners recognize the endless number of potential customers and the wide variety of unique services in the market to differentiate firms. I left feeling immensely appreciative of “competitors” who treated System Six more like a partner, willing to share information, resources, and encouragement. Take heart; there are fabulous firm owners leading the charge into the next iteration of cloud accounting services.

Getting Ready for Year End: Secure or Switch CPAs

Getting Ready for Year End: Secure or Switch CPAs

One of our least favorite tasks is having to make changes in our critical professional relationships. Whether it’s shopping around for a new dentist, doctor, or accountant, the search and subsequent transfer of years of paperwork and documentation can be overwhelming.

However, there are numerous reasons why you may find yourself needing a new CPA as your business evolves and grows. While you may not be able to skip the tedious process of shopping for a CPA that meets your unique needs, you can save yourself time and overwhelm by beginning that search early.

Why You Might Need to Switch CPAs

There are multiple reasons why you might change CPAs. How do you know if it’s time for you to begin that search?

You’ve had a bad experience.

CPAs are part of the service industry, and you are the customer. You wouldn’t continue to go to a store or restaurant where the employees mistreated you. If a CPA is rude or inexperienced, you do not have to stay with them.

They can’t answer your questions.

Your CPA should be able to answer any questions you have without making you feel embarrassed or rushed. Look for a patient CPA who invests in helping you understand the whole process. This professional relationship is built on trust. If you are struggling to communicate with and trust your current CPA, it might be a good time to start shopping around for someone who can better meet your needs.

You need a CPA with specific expertise.

If you are in a highly regulated industry, such as insurance, medical services, or newer industries such as cannabis or cryptocurrency, you will need a particular CPA who is experienced and equipped to help you. Most US states have very specific tax codes and regulations at state level, in addition to the millions of rules at the federal level! If your company operates in several states, you need a CPA versed in national tax codes, as well as state laws. Make sure your CPA understands and is prepared to help you navigate these complexities.

They need to be able to grow with you.

Does your CPA use the same technology as you? Do you share visions of innovation? Are they planning on retiring in a year or two? These are all critical questions to consider as you look for the right CPA. It might not be worth starting a new professional relationship with someone on the brink of retirement or with someone who still works with paper-and-pen systems when all your files and data are digital. Keep the big picture in mind as you prepare questions for a prospective new CPA.

When to Secure Your CPA 

Unfortunately, if you wait until January or February to secure a new CPA, you may be too late. Many CPA firms book up by January, and by waiting too long, you run the risk that your preferred firms will not have the capacity to serve you in time for the upcoming tax season.

If you need a new tax-preparing CPA, you need to start shopping around in the fall.

Ask for recommendations from respected friends and your professional network (certainly, ask us!). Then follow up with firms individually for a one-on-one meeting. Don’t be afraid to ask questions or present specific scenarios to gauge how well you would collaborate. Starting this process in the fall provides ample time to vet your options and onboard your company before the crunch of tax season. 

Switching to a new CPA may feel like a daunting task, but you can set yourself up for success by beginning early and advocating for your company’s needs.

Getting Ready for the End of the Year: Personal Expenses

Getting Ready for the End of the Year: Personal Expenses

Is it just us, or does time seem to accelerate as we move into the fall season? It’s like the time between summer ending and the beginning of the holiday season turns into a busy blur, and before we know it, we find ourselves at the end of the year in a mad rush to get ready for tax season.

Fortunately, we know there are small, practical steps you can start taking this fall to have your business ready for the end of the year, so you don’t find yourself scrambling in January. That’s why for the rest of the year, we’re going to be focusing on “Getting Ready for Year-End,” sharing our most constructive ideas on how you can best support your CPA, bookkeeper, and business before the next tax season.

Separating Personal Expenses

Your greatest priority before the end of the year is to have clean books by January before processing documents for taxes. Separating your personal expenses from business expenses is a great place to begin, as it can be a time-consuming job – especially if you get a late start!

Many business owners have separate cards for their business and personal expenses, but sometimes the wrong card gets used. Sometimes larger personal purchases are put on the business card because it’s the one that gives back the most points or discounts with certain vendors. These switch-ups may not happen frequently, but that makes them easy to miss or lose track of.

Where to Begin

As you go through your books to separate the personal expenses from the business expenses, start large and work towards small. Identify the substantial expenses first, like travel and purchases of equipment or assets. Once those are appropriately categorized, move on to the smaller expenses, like meals and office supplies. Just like breaking household chores down room by room makes the work seem less overwhelming, breaking up this expense categorization into different sections makes a potentially overwhelming task much more manageable.

Home Office Deductions

If you are one of many business owners working out of a home office, you can deduct a percentage of your home utilities based on the square footage of your office compared to your house. This is another tedious task that can be easy to forget until your CPA is asking for the numbers in the middle of tax season. As you sort out your personal expenses, take the time now to figure out these square footage percentages before the end of the year. Your CPA or bookkeeper will thank you!


The best way to ensure you don’t miss essential deductions, big or small, is to make personal expenses clean up a monthly rhythm. Much like the dust piles up when you let too much time pass between sweeping your house, your books get “muddier” and more confusing the longer you let them pile up without separating them. Unfortunately, the muddier the books get, the greater the chance is that you’re going to make a costly error.

At the very least, we recommend making a fall month like October your yearly reminder to comb through your books. Avoiding the mistake of waiting until January will save you time, peace of mind and ultimately, dollars.

The Accounting Leaders Podcast

The Accounting Leaders Podcast

Last month, System Six founder, Jeremy Allen, was featured as the inaugural guest for Accounting Leaders Podcast. Hosted by Karbon Founder & Director Stuart McLeod, the Accounting Leaders Podcast curates the best resources in the industry through conversations with accounting’s most significant innovators. 

Jeremy and Stuart talk about small-town living, from the culinary limits of the midwest to the blessing of living near family in a slower, tighter-knit community. Jeremy’s recent move from Seattle, WA to Holland, MI, opts for colder, snowier winters but relatively easy access to big cities like Chicago and idyllic towns like Traverse City. While COVID may have changed the work-home balance for many individuals, nothing radically shifted in the operations of System Six. System Six has always been a remote firm with team members across more than a dozen states. While other industries struggled with the forced pivot to cloud-based systems, virtual meetings, and communications logs, System Six carried on with business as usual. 

“For the first seven years, we had to convince people why the Cloud was good.”

“For the first seven years, we had to convince people why the Cloud was good, but COVID accelerated that,” says Jeremy. Remote, streamlined technologies are not just a slick option; they are essential to day-to-day business. Offering a work-from-home option for employees used to make System Six stand out among the crowd. High-class talent sought out the rare opportunity to provide quality CAS from the comfort of their homes. But the shift to at-home work for the entire industry means that System Six no longer offers something exclusive. Stuart points out that this shift, paired with the scarcity and challenge of finding and retaining talent, could pose problems for System Six’s growth in the future. Jeremy acknowledges that, in this case, company culture will probably emerge as their unique differentiator. 

Growth and innovation have always been in the DNA of System Six. Jeremy founded the business with neither experience as a bookkeeper or training in accounting. What he was keenly aware of, however, was the day-to-day frustrations of navigating finances as a small business owner. Having launched several businesses before System Six, Jeremy found processes for payroll to be antiquated and lacking in technology advances of parallel industries. While accountants were helpful during tax season, they weren’t always supportive throughout the year and lacked the patience and expertise to provide holistic advisory services. Without someone “in the books” from week to week, financial records would become muddy, late, or disorganized, and only the business owner was left to clean up the mess. Amid his own frustrations birthed his most successful business. 

His experience not only resonated with other small business owners but non-profits, churches, financial firms, and high-net-worth individuals. He quickly realized that managing the minutia of receipts and payroll brought immense relief. Their services were both systematic and highly “sticky.” While System Six loves innovation and technology, “slow and steady wins the race” for Jeremy Allen. Stuart asks about the future of System Six, and Jeremy shares exciting opportunities for acquisition or acquiring another business. “It’s always nice to get asked to prom,” jokes Jeremy. Entertaining invitations for mergers is flattering, but the fit has to be more than financial. For Jeremy, the highest priority will always be if a suitor is right for the employees, families, vision, and mission of System Six. 

Listen to the full episode of the Accounting Leaders Podcast here: https://accountingleaderspodcast.com/