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A Year-End Small Business Checklist for 2021

Businesses were forced to reinvent and rework the way they operated in 2020, making wrapping up this year more challenging than in years prior. From keeping up with social distancing and health guidelines to navigating new customer expectations and re-forecasted budgets – we know businesses like yours have been (and continue to be) pulled in many directions.

We also know how important it is to end this year the right way. In a way that doesn’t cause more stress down the road, but that prepares you to come back stronger in 2021. Consider these areas as potential focuses as you enter the New Year.


Iron out your Finances

Finances probably aren’t your favorite aspect of running a business, but they are the most important if you want to reach your performance goals. To finalize your financial reports and see year end performance, you must do a few things first.

Consult with your Accountant or Tax Preparer

This year it is especially important to schedule a meeting with your Accountant or Tax Preparer. There are significant tax-payment deferrals, cash refunds, and credits available from the IRS that can help mitigate the impact of COVID-19. If you haven’t already, consult with your tax expert on any of the below that could apply to your 2020 taxes.

  • Deferral of employer’s social security tax

    This tax payment can be deferred for up to two years.

  • Tax credits for paid sick leave to employees affected by COVID-19

    There are several tax benefits and credits available that you can take advantage of. Use your payroll and time tracking software to collect applicable information on sick-time to make this process easier.

  • Employee retention credits

    The CARES act has authorized a tax credit equal to 50% of qualified wages paid to retained employees, up to a $5,000 benefit per employee. (Note: This credit cannot be “doubled up” with PPP forgiveness)

  • State tax incentives

    Consult with your tax advisor regarding any applicable state incentives that you can leverage.

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Set aside time to review goals, business plan, and performance

How did your business respond to the COVID-19 pandemic? And, how did it affect your projected financial statements versus your actuals for the year? Now is the time to assess how your leadership was able to handle the adversity, and determine the ways you will adapt your business strategy based on what you’ve learned. As you prepare to enter the new normal, how should your strategy change or stay the same? Identify the parts of your business that should be reworked, reused, or retired. 

What goals did you hit in 2020? Sales targets are one thing, but what about efficiency, customer service, or resiliency? If you didn’t set any goals or didn’t meet the goals you set, consider alternative markers of success you can share with your team as you round out the year. During a difficult year, It’s especially important to reinforce the wins you had and recognize your team’s hard work.

There’s a pretty high chance that the year did not go as planned. Revisit your business plan and see where you stand. Are there any lessons learned from 2020 that you can bring into the new year? Perhaps the importance of a strong digital marketing strategy, or a greater emphasis on customer service. Consider how you can make adjustments to reflect your learnings.

Make sure you are working with your IT specialist to back up all company data at year end. This includes sales receipts, vendor information, customer information, business phone numbers, everything! If you set up a new website this year, or made any major changes, make sure that your site is also backed up. 

With non-essential businesses being closed during the Spring, you might have extra inventory laying around. Start preparing for the physical inventory count as soon as you can. If you have inventory you will likely have a very busy holiday sales seasonespecially if you have an e-commerce site. This may cause some chaos with inventory storage, so clean up ahead of time if you can.

To tie with your financial statements, you need to have a clear picture of inventory value on hand as of the end of the year. Some companies close down on New Year’s Day for an inventory count. Others do it a few days before or after and back out the difference in sales and inventory receipts. Do what works for your business this year.


Review Employee Performance, Bonuses & Staffing Changes

The end of the year is a natural time to review employee performance and strategize for the coming year.

Every employee should be reviewed at least once a year. Revisit the criteria you have previously used to review employees and make any necessary adjustments based on work disruptions this year. 

Employees are probably feeling apprehensive about end of the year bonuses, raises, and pay cuts. Wherever your company stands, be transparent as soon as possible. If you need to make pay cuts, let your team know as soon as possible so they can start preparing. Additionally, you might consider how to add value other than monetary compensation. Adding additional flexibility for family time and caretaker responsibilities or offering more vacation days show that you care about your team’s mental wellbeing and their performance.

You have probably already started to evaluate your staffing situation. Do you need to hire more team members? The unemployment rate has raised significantly in the past few months which means people are actively searching for new opportunities. If applicable, consider how you will train and onboard new employees remotely. On the other hand, if you know you need to scale back your team, let employees know as soon as possible. Help soothe the transition by writing recommendations for and offering connections to your well-performing employees. 

Of course, this list could go on and on. But now is the time to focus on what is essential, not what is nice to have. When you have extra down-time, you can come back to work and tackle the second-tier projects like updating contact information or filming that video you’ve always wanted to share…

As a challenging year comes to a close, these are the most critical things for your small business to do. We hope this checklist will help you stay organized and forward-looking to a stronger, more resilient 2021.


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