Many small business owners are looking forward to ending 2020. They are looking forward to starting a new chapter after facing the most challenging year our generation has ever witnessed. With advertisements for holiday shopping being distributed and the holidays just weeks away, 2020 will pass us by quickly. We put together a 2020 Small Business Owners Year-End Guide for inspiration to help prepare for a prosperous 2021!
Here are our top 10 suggestions to prepare for year-end:
1. Organize and Evaluate Business’ Finances.
Financial Statements can be gathered and placed into a physical or digital file. This can be referenced in early 2021 to prepare for tax filings.
These files may include:
- Payroll
- Banking
- Credit Cards
- Loan
- Other documentation
- Include 2019’s tax return
The early organization will allow tax returns to be prepared. It will allow time to evaluate finances. One may decide to make last-minute changes to reduce tax liabilities.
Business owners who may be considering an entity change may want to consider starting this process now, as January is a prevalent time. The turnaround time could be delayed. Making an appointment with your accountant to be proactive may be a good idea.
2. Perform Quality Checks on Financial Reports.
It may be a good idea to review transactions to ensure that each expense is categorized in QuickBooks (or other record-keeping software) is valuable in presenting a clear picture of the company’s behalf.
Perform some checks and balances. Ensure that reports submitted to government agencies match to avoid any red flags.
- The data reported to the IRS at the end of the year when filing W-2s should match exactly what was reported on the 940/941s throughout the year.
- Ensure employee records are accurate. If W-2s are mailed, make sure your employees’ addresses are up to date. PaySmart runs reports for clients to ensure that social security numbers are accurate before W-2 forms being issued in January. This provides a higher level of service that our clients can count on to avoid any potential headaches down the road.
Double-check personal credit card statements and cash receipts to ensure that any business expense paid personally is adjusted and accounted for.
3. Evaluate and Maintain Current Vendor Contracts.
Review the information that is on file for the company’s vendors:
- Are W-9s on file for all contractors? This form includes the information for vendors so that their 1099 can be filed correctly and timely.
- Is there a need to set up a time to review these existing contracts and plans for the following year? Is it appropriate to shop vendors for reasons such as pricing or service?
After such a rough year for so many small businesses, many businesses have decided that they have a choice to support local organizations to get through this tough time together!
Fourth-quarter is the perfect time to evaluate payroll and insurance providers. PaySmart understands what it is like to be a small business and appreciates the opportunity to quote your business’s payroll. We’d appreciate the opportunity to quote your payroll.
4. Create a Budget for 2021.
Many businesses utilize their business goals and existing financials from their previous year to create a budget for the following year.
Some organizations that did experience an impact on their bottom line in 2020 may be a good starting point to establish a budget. Those who did have a challenging year may want to look at alternative methods. Looking at previous years’ data before setting a budget for 2021 may be helpful. Adjusting sales projections and reviewing marketing budgets may be necessary.
5. Set Goals for 2021.
Sometimes it is easy to combine budget and goals. They are not the same.
In 2020, many organizations have chosen to pivot, offering different services this year. Perhaps what was a band-aid turned into a permanent solution.
- Has your profit margin and your earning potential on this new service or product been evaluated?
- Is adjusting the current marketing strategies necessary to support these recent changes?
With many of these changes taking place so quickly, it is important to look at the organization’s objectives and update goals based on these changes.
Once establishing 2021 goals, roll them out to your team, so they can focus on making the new year successful, too.
6. Plan Upcoming Holiday Gifts or Events.
While the COVID-19 pandemic has made large events challenging, there are still some ways appreciation can be shown to customers and employees while practicing social distancing.
Consider offering employees a gift certificate to a local restaurant if you normally would take everyone out for a gathering. Include a thank-you note to show appreciation.
Local flower shops, candy stores, and other small businesses offering personalized items would be thrilled to support efforts of showing appreciation to top customers. Many of these businesses can ship or deliver items, reducing exposure to the virus.
Giving thanks and showing gratitude is important this year.
7. Make a List of Accomplishments.
Owners and managers may want to create a list of the organization’s accomplishments and post it internally. Share testimonials. Get your team involved! This can help improve morale and contribute to positive work culture.
8. Evaluate your Cash Flow.
Our 2020 Small Business Owners Year-End Guide has to address cash flow. Limited cash flow proved to be a contributor to the economic crisis for many businesses in 2020.
It is important to remain current on invoicing customers and ensure that payments are received on time. This will help to keep your books up to date, increasing cash flow. Follow up with accounts that are past due and suggest payment arrangements. This can make a significant impact on financials.
9. Manage Existing Inventories.
Inventory management is important for several reasons, which include:
- Maintaining a current inventory is necessary for tax purposes.
- It is also valuable to evaluate what products are selling and what may need to be replenished to serve customers with future needs.
- Companies may save money if a product is not performing well. If there is plenty of stock, reducing or eliminating a re-order could save the company valuable dollars.
- Inventory management is crucial to managing loss-prevention.
10. Evaluate and Update Digital Presence.
Websites perform best when kept up to date and are fresh, and utilize content relatable to customers.
- Perform a quick SEO check to ensure potential customers can find you.
- Check website links to make sure they all work properly.
- Add fresh content, which may include specials and promotions and valuable information about the business.
- Ensure important information is up to date; this may include your hours.
- If social media is being utilized, evaluate the effectiveness of campaigns.
2020 is one year that will go down in the books for sure.
Businesses that plan for their future and consider supporting other local businesses. This will help strengthen our local economy. Together we will all get back on track after these tough times.
PaySmart is a payroll provider located in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. We are dedicated to helping small businesses take care of their payroll needs. To learn more information about how PaySmart may provide payroll solutions, please contact us at 717-766-1777. Our New Client Concierge is waiting for you!