The buzz that accompanies the beginning of any new year is exciting, but the transition from 2020 to 2021 feels extra special. 2020 put businesses up to the ultimate test. Whether faced with the need to tap into the PPP loan program, or navigating local government mandates to operate your business — the challenges of the past year will soon give way to the fresh promise in the New Year.
As a business, it is important to prepare for 2021. New challenges may arise, and you need to be prepared to continue to adapt. Preparing for the potential impact to your businesses finances is a wise exercise in strategic business planning. AB Financial accounting services is here to help.
Here are Our Top 9 Tips for Accounting Going into 2021
1. Study Your Businesses Books — Get the full picture. Know all the ins, outs, highs and lows of 2020. Knowing where you have been will reveal what has worked, and most importantly, what can be improved in 2021. With clarity gained from a review of all the accounting records, goals for 2021 will become obvious.
2. Summarize Growth and Revenue — The most vital outcome of a review of the books, is a summary of growth and revenue. Put all the data points into a concise statement-of-summary to determine an operational mission statement for the coming year.
3. Check in with Your Tax Pro — Your tax professional is there to protect your bottom line. A New Year check-in will help to both finalize the tax strategies in place for 2020, and provide the opportunity to strategize for 2021. There are a number of tax code changes affecting businesses. Knowing what the changes are, and how to manage your business with an eye of minimizing liability is the top line service your tax pro can provide entering the New Year. If you are in need of a tax professional, look no further than AB Financial Group. Contact us today to learn how we can help navigate your taxes: 970-444-5586.
4. Set New Goals For Growth — After completing the first three steps, you are prepared to articulate clear and precise goals for growth in the new year. This should take into account industry wide forecasting, and include a solid overview of macroeconomic conditions affecting the economy at large. Once your goals are in place, prepare to promote them across the company to build team consensus of purpose.
5. Evaluate Internal Controls — Evaluate your internal controls to ensure effectiveness. Looking at the controls broadly is a good start, but a more in-depth analysis may be necessary to fully identify inefficiencies. These controls should include:
- Digital security and data backup
- Ongoing timely financial reconciliation
- Duty separation and required approvals
- Updated asset audits
- Accounting systems evaluations in real time
Finding any lapse in internal controls will help correct errors in real time so they don’t get out of hand, prevent potential fraud, and ultimately help protect your bottom line.
6. Analyze Payroll Management — Analysis of your 2020 payroll management system is a way to help manage costs. Ensuring that each employee, consultant, and independent contractor is classified correctly will help prevent any penalty loss from a misclassification. Streamlining the system with the latest innovations in electronic payment management is a great way to stay on the cutting edge of this Human Resources management task. Efficiently collecting payroll analytics provides an important set of business solutions, including:
- Protection against payroll and employee cost errors
- Data for business decisions, including future planning
- Maintaining a clear cost snapshot of staffing practices
- Creating a clear path for winning and retaining talent in 2021
7. Settle Outstanding Accounts — Start with your homework. Is the outstanding invoice correct? Is the amount due correct? Was it sent to the customer? Has the due date passed and by how long? Once it is determined to be overdue, reach out to the individual. Use a friendly email to ask if the invoice was received, or if a copy should be sent. Year end is the time to gently increase the pressure, but with the same polite and gracious tone. This will help increase your chances of collecting and settling any outstanding invoices for a fresh start to 2021.
8. Analyze Your Budget and Reserve for 2021 — The analysis of your 2021 budget and reserve will accomplish two major planning guiding questions:
- First, do the 2021 budget projections align with the historical 2020 performance? If not, what are the action steps, conditions and organizational steps planned to address the difference.
- Second, does the 2020 reserve balance remain sufficient for the projections associated with 2021 as it affects the long term durability of the reserve fund? If not, what are the steps to ameliorate the difference.
AB FInancial is a unique position to assist with the analysis of our 2021 budget and reserve. If you are struggling to navigate your 2021 budget, let us help.
9. Outsource Accounting Services in 2021 — Is it time to outsource your accounting services in 2021? Gain a professional partner. Outsourcing accounting services may be the best way to protect time and money moving into the New Year. Working with an accounting service will increase both your personal performance as well as your business’ efficiency. You can expect these professional benefits:
- Reduced cost
- Accessing professional accounting talent
- Consistently ensuring fiscal compliance
- Streamlining financial reports
- Strengthening security
- Freeing up time for important business tasks
2021 is going to be a new adventure for your business. Follow our top 9 tips to set your business up for success in the new year. Contact AB Financial Group for all of your accounting needs: 970-444-5586. We are here to make 2021 your best year yet.