As the end of 2020 gets near, it’s important for businesses to start thinking of wrapping things up for the calendar year.
Financials and Bookkeeping
As soon as the clock strikes midnight on Dec 31st, you can start working on getting your books up to date by making sure all transactions for 2020 have been entered. The easiest way to do this is to make sure your business bank account is linked to your Quickbooks or accounting software. Make sure to note any accounts receivable that are still outstanding, and double check that the bills have been sent out. Once you have your bank statement for December, then you can reconcile December, and finalize your 2020 financial records.
Once you’ve reconciled your books with your bank account, then it’s time to run year-end financial reports, back them up, and save them. You will want to make sure to run a detailed P&L statement, a P&L summary, and also your balance sheet. Your accountant will most likely need all of these reports. Another good idea would be to back up your computer, with all of your financial records and customer data.
Gather all of your financial reports, necessary receipts, etc and send everything to your tax professional so they can get your tax return going ASAP. Many accounting software programs even have the option of adding your CPA as a user, so they can log in straight to your software and pull all of the reports and records that they need. Corporate tax returns are due in March, so you want to make sure you get a jump on getting those returns done. Especially if you plan to sell your business in the new year, your business broker and potential buyers will need to see your 2020 tax returns, so you will want to be able to provide them quickly.
If you have a business that carries inventory, now is a great time to take a physical inventory of items held for resale, and make sure to update your records, so that you have an accurate number.
W2s and 1099s
By law, all W2 and 1099s need to be sent to employees and independent contractors by January 31. So, you want to make sure that you or your payroll company processes those documents ASAP. This is a great time to make sure that you double check with all of your employees and contractors to make sure that you have their correct address on file.
Take this opportunity to conduct annual employee reviews. This will give you the opportunity to assess their performance, and offer raises, bonuses, and/or promotions. Your employees are the absolute backbone of your business, and it is important to make sure your employees are not only performing to the best of their ability, but you want to make sure you have the right person in each role, and you want to check in with them to make sure they are feeling happy in their job. Good employees are hard to find, and when you do, you want to hang onto them. Find out what motivates and drives them, and reward them accordingly.
There is no better time to review 2020’s goals and make goals for 2021 than the new year. Look at your sales, profit, or whatever your measure of success was and see how it staked up to the business goals you made for the year. Why did you set those goals, what did you do to work towards those goals, and how did you do with achieving them? If you didn’t achieve your goals, reflect on why you think that is and what might have contributed to the loss of achievement. If your team was part of the goal making process, make sure they are included in this reflection as well. Taking 2020’s results into account, now you can make informed, realistic, and achievable goals for 2021. Involve your team in goal making, and if reaching these goals is a down to their performance, make sure they feel a sense of ownership and drive to reach these goals is the coming year.
Now is also a great time to review the financial health of your company. Look at expenses and see where you could possibly cut or use funds more efficiently. Look at certain products or services that are under performing or doing very well. How can you take advantage of removing underperforming items or services and double down on the successful products or services? Also take a look at the efficiency of your processes and procedures. That can definitely impact your bottom line, so if there is something that you can improve upon, then make some changes. Look at the success or failure of your marketing efforts. Now might be a smart time to upgrade your website or invest in some SEO. Last, but certainly not least, take a look at your customer or client feedback. Have they had any issues or made suggestions for improvement? The customer is not always right, but they can offer insight about the customer experience or product quality that you can use to improve your business and take it to the next level in 2021.