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.
1) Cash flow from operating activities such as revenues and expenses2) Cash flow from investing activities such as assets purchased and assets sold3) 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.
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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:
Keep in mind the following payroll dates:
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.
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