As we approach the last few weeks of 2020, it’s more important than ever to take a moment to assess what all has happened in your business and your personal life throughout 2020.
Often business owners tend to make judgements about business performance through the lens of quarters or even months. Expanding your time frame can help you find patterns, strengths, or even areas of weakness that you can possibly improve next year. It’s best that you do this assessment alongside a trusted accounting partner to set yourself up for success moving into a new year.
Here are five questions you should ask your accountant for the upcoming year.
#1: What Has Changed?
The main reason individuals outsource accounting services is to better manage any personal or professional tax code changes that occur. Especially in light of the onset of COVID-19 and the resulting global pandemic, it’s imperative that your accountant communicates any changes to filing taxes or how monies should be recorded.
The government stimulus and the PPP (Paycheck Protection Program) loans are just two examples of unusual funds that need to be accounted for properly. There may be new credits or deductions your business qualifies for this year that it has not qualified for in the past.
This year especially, it’s important to know what has changed.
#2: How Have We Performed?
Again, this year has been especially tough for individuals and business owners alike as government restrictions have forced many to close their doors and/or file for unemployment for some period of time.
It’s fairly safe to assume that most business projections for 2020 weren’t realized—and that can be a painful reality. However, it can still be exceedingly helpful to look back on the year’s performance to see what lessons can be learned, and to form a realistic outlook for 2021.
#3: Do We Need to Update Our Payroll System?
If you’re still writing paper checks, switching to an electronic payroll system could streamline your process and save you money in the process. Be sure to review all your workers and make sure they are properly classified. Are they employees, independent contractors, or consultants? This simple review every year can protect you from government penalties and save you valuable resources.
#4: How Do We Handle Unpaid Customer Invoices?
Making sure you’re collecting the money you’ve earned is essential to having a positive cash flow and a viable business. Assess whether this is a common problem or not in your business. If it is, decide with your accountant if there’s a better system you could implement to collect unpaid invoices in a timely fashion.
#5: Are We Prepared?
If there is any upside to the unprecedented challenges this year, it may be that businesses are acutely aware of the importance of having an emergency reserve. Now more than ever, there’s a need to make sure you can handle unforeseen challenges to cash flow, payroll, or demand.
Creating a strategy with your accountant to make sure you can access extra capital during times of emergency or unforeseen strain can be the best way to set yourself up for success moving forward.
Need A Trusted Partner?
If you’re trying to handle all of these accounting systems in-house while you run a business, chances are you’re missing opportunities that costs you time and money.
If you are looking for a trusted resource to help you answer these questions or tackle some of the accounting tasks for your business, contact us today. We are happy to help you through this process and prepare for success in the new year.