A New Year financial checklist for small business owners: Tax, payroll and more

With 2020 behind us, take care of all your essential business tasks with this handy checklist of admin tasks and processes.

07 January 2021

As we wrap up what has been a very trying 12 months for many, the new year brings with it a whole host of things that, for small businesses, can make the early months of the calendar even busier than they already are.

With things like financial statements and employee incentives to plan for heading into 2021, such tasks can certainly mount up. But by taking care of them now, it can take your mind off things over the course of Q1.

Here, we've collected together the key administrative tasks and financial processes you'll need to prepare for into one handy checklist, to make sure you haven't missed anything.

 

Generate financial reports

Use the start of the year to assess your financial standing and how your current financial situation compares to previous years. Whatever accounting software or system you prefer to use, the financial report you generated typically includes an income statement, a balance sheet, and a cash flow statement.

 

  • The balance sheet summarises your business' financial position at a point in time, and shows your assets, liabilities and equity.

  • The income statement, also known as a profit and loss statement, itemises your revenue expenses for a period of time and lets you see at a glance whether your business is profitable. It's this statement that provides an outlook for the coming year; if your profits are lower than expected, you may want to make changes heading into Q1. If they're higher than expected, you may want to make some larger purchases for which you can record future depreciation.

 

woman smiling whilst talking on the phone

  • The cash flow statement reconciles your opening cash with closing cash for a particular period, indicating where the money has gone. To prepare a cash flow statement for the previous 12 months, for instance, you'll need to list and summarise your business' cash inflow and outflow for the below:

 

1) Cash flow from operating activities such as revenues and expenses
2) Cash flow from investing activities such as assets purchased and assets sold
3) Cash flow from financial activities such as new loans taken, loan repayments made and partner or shareholder investments or distributions

By identifying these, you'll be able to see the increase or decrease in your business' cash over that period, showing at a glance where your money went.

 

Double-check vendor information

 

2020 was a year of upheaval, to put it mildly, so it's a good idea to verify your vendor information as we head into a new year. Be sure to double-check that contact information (phone number, email address, and contact name) are still correct for each of your vendors.

If you have any inactive vendors or inaccurate information then delete or amend as necessary, and if you have time, you may want to evaluate the relationships you have with these vendors in order to negotiate better deals for the year ahead.

 

Reconcile accounts receivable

Accounts receivable is the amount that your customers owe you after purchasing your goods or services on credit, i.e. it's a list of unpaid invoices and clients who owe money for work that's already been completed.

If your list is a bit on the lengthy side, then it's a good idea to try and whittle it down before the financial year is over. Calculating your accounts receivable turnover ratio can tell you how efficiently your business follows up on collecting its revenue. Higher ratios show your customers pay their debts quickly, while a lower ratio shows the opposite.

Whatever your ratio, collecting outstanding payments in a timely fashion is always a good idea since it can boost your cash flow, and means you won't be operating with any outstanding invoices.

 

florist writing down notes


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Double-check payroll

If there are issues to sort out with payroll, then now is the time to take care of them. Make sure you're carrying out the following:

  • Give your employees a P60 – You must provide employees with a P60 to summarise their pay and deductions for the last tax year. You'll have to provide each of your current employees with a P60 by 31 May.
  • Prepare for week 53 – If you run a weekly payroll, including fortnightly or four-weekly, then you may have to complete an extra pay run, known as week 53. This happens if you're due to pay employees on the tax year-end date, i.e. 5 April.
  • Submit your report by 5 April – Finally, report your previous tax year to HMRC by 5 April.

 

woman writing down notes

Keep in mind the following payroll dates:

      • From 6 April: Update employee payroll records and ensure your payroll software is updated.
      • By 31 May: Give your current employees a P60.
      • By 6 July: Report employee expenses and benefits if they aren't being processed through payroll.
      • By 22 July: Pay class 1A NIC on P11D benefits.

Plan for the year ahead

Once you've cleared up any outstanding red tape with regards to your finances, you're ready to do some planning for the year ahead. Set achievable goals, prepare any action plans that'll help you along the way, and start implementing these plans as soon as you can.

Before you set any goals, make sure they're going to accomplish what you want to accomplish; any targets you have for the year should stay in sync with the broader, long-term objects of the business as a whole.

 

Gazprom Energy is a leading supplier of energy for small businesses, offering competitive gas and electricity contracts that are simple to set up and manage. For more information, visit the homepage or call our team today on 0161 837 3395.

The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.


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