Wrap up 2020 with our year-end checklist
1. Prepare your financial statements.
Detailed explanations of these can be found on the SEC site.
These show what your business owns and what it owes at a given point in time. The goal is to strike a balance between the two.
ASSETS = Liabilities + Shareholders’ Equity
One of the big tasks involved in gathering these numbers is inventory assessment and reconciliation. For accounting purposes, inventory is counted as an asset, but too much inventory can act as a liability. Accurate forecasting can positively impact your business.
These report revenue and the costs associated with generating that revenue. They are sometimes called Profit & Loss (or P&L) Statements. Their “bottom line” shows if a business if profitable or not. Income statements also report shareholder earnings per share.
NET PROFIT OR NET LOSS = Gross Revenue from Sales + Interest Income – Returns, Production Costs, Operating Expenses (including salaries, benefit costs, research, marketing efforts, travel expenses, equipment costs, utilities), Interest Expense, Taxes
EARNINGS PER SHARE = Total Net Income ÷ Number of Outstanding Company Shares
Cash Flow Statements
These report the shift in cash for a given, finite period of time, much like a checking or savings account statement with a starting balance and an ending balance.
- Operating cash flow analyzes cash flow from net profits or net losses (from the Income Statement).
- Investing cash flow considers long-term assets purchased or sold.
- Financial cash flow calculates loans taken, loan repayments, investing activities, and shareholder distributions.
2. Chase Accounts Receivable
It's probably too late to collect payment by the end of this year, but now is a good time to send overdue payment reminders and provide customers with an easy way to request a payment plan.
3. Organize your documents for taxes
Receipts and more
The IRS has published a list of the types of records you should have kept throughout the year for tax purposes.
Check to see that your files include a W-9 for every vendor or contractor to whom you paid $600 or more during the year and a W-4 form for each employee. This will make creating 1099s and W-2s go smoothly after the year ends.
You may find reviewing a couple of our earlier blogs to be helpful, too:
Tips to Prepare Your Small Business for Tax Season
Boost Your Bottom Line with These Tax Return Tips
4. Make tax-deductible purchases, contributions, and donations by December 31
5. Give your business a high five
Congratulations! You enjoyed another year of success. Now it’s time to reflect and ask these High Five Questions:
- How do you expect next year to differ from this year?
- What should you continue to do and perhaps do more of?
- What should you stop doing?
- How can you expand your product or service offerings?
- How can you grow your customer base?
The answers to these questions can help drive your marketing strategy for the upcoming year.
6. Plan to plan
Schedule several one- to two-hour meetings on your calendar for planning. If you don't block this time, something else will surely fill it.
Write down your goal(s) for the new year
Putting your goals in writing helps to solidify your commitment. This document can also be used as a reference to help you stay on course when new opportunities present themselves.
Ask key employees what they would change about your business in 2021
As long as you pre-empt asking with a “disclosure” that you won’t be implementing all suggestions, they will know that you are listening and be grateful that you asked. As an owner, you’re operating at a higher level — the 30,000-foot view, as they say. Your employees are in the trenches, dealing directly with customers daily, and are possibly experiencing operational or technical frustrations unknown to you.
Do an annual review of your compensation and benefits plans
This is critical to keeping and attracting the best talent to help your business succeed.
Ask yourself what you can “gift” your employees during the holiday season
Can you afford to give them extra time off during the holidays? Good employees want to do a good job, but the holidays bring both joy and stress. If you can afford to do so, giving each employee a “shopping day” would go a long way to helping them feel less stress and enable them to stay focused.
Plan your vacation!
While running a business requires you to have superhuman abilities, you also need — and deserve — a vacation. Having it planned gives you plenty of time to prepare the elves and to notify clients in advance.
Wishing you a wonderful holiday season and a prosperous new year!