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As we barrel toward the end of the 2012, it’s time to tie up any loose ends regarding the financial and legal aspects of your business. Ending the year the right way will give you a running start going into 2013.

While this is undeniably a busy time of year, here are eight things every small business should do as he or she closes out the year.

Get Your Financial Books in Order

Before you decide to make any last minute tax moves, you’ll need to know your business’ financial picture for the year. If you haven’t done so already, take charge of your books to determine what you’ve made and what you’ve spent in 2012. Whether you’re a solo freelancer with a box of paper receipts or a business owner with a bookkeeper on payroll, you’ve got to get a handle of your business’ profit and loss before you can do anything else.

Assess Your Tax Strategies

If, after organizing your books, you find yourself with a larger than expected profit, you may want to consider any major purchases you should make while it’s still 2012, particularly because, as of now, the Section 179 deduction limits are set to plummet in 2013.

In addition, if you haven’t already set up a retirement plan, you have until Dec. 31 to sign the paperwork with a financial institution to create a plan. Then you have until the extended due date of the 2012 income tax return to make tax-deductible contributions for the year.

Look at Your Estimated Tax Payments for 2012

Once you have a firm grasp of your business’ profitability for the year, you should assess the estimated tax payments you’ve already made, and then plan for your final payment (due Jan. 15), accordingly.

Hold an Annual Meeting for Your LLC or Corporation

If you’re operating your business as an LLC or corporation, you’re required to hold an annual meeting for your shareholders (corp.) or members (LLC). Don’t overlook these administrative requirements — if you’ve gone through the work to incorporate your business, you want to keep it in good standing.

Check if You Need to File Your Annual Report

The annual report is another admin formality required to keep your corporation or LLC in compliance. Depending on the state where you incorporated, you may be required to file a report once per year or every two years, due either on the calendar year (i.e. by Dec. 31) or on your date of incorporation. The bottom line? Make sure you know your annual report obligations and deadlines, and don’t be late.

Verify Your 1099/W2 information

If you have vendors and/or employees, this is the time to make sure your records are up to date. Put together a list (or update it) of all the vendors/contractors to whom you’ll be giving a 1099 for 2012. Make sure you have current mailing addresses and correct federal ID numbers. Likewise, if you have employees, update your records for current addresses, names, marital status, etc.

Close an Inactive Business

If you have an inactive business (and don’t plan to revive it back online next year), you should formally close it by filing an “Articles of Dissolution” or “Certificate of Termination” document (if it was operating as an Inc. or LLC). Until you actually file this paperwork with the state, you’ll still be on the hook for an annual report, fees, tax returns, etc. For this reason, you should definitely take the time to close your business within 2012, so you’ll be free from any financial or administrative responsibilities next year.

Touch Base With Your Best Customers

Your business would be nowhere if it weren’t for your customers or clients. In the midst of preparing your year-end tax reporting and evaluating your business’ cash flow, make time to personally contact your best clients or customers. The end of the year is an ideal time to show your customers how much you appreciate their business, as well as find new ways you can serve them even better next year.

How are you preparing your business for the end of the year?

Image courtesy of iStockphoto, Squaredpixels

Source: mashable.com.