The close of 2020 means that you’ve been busy getting your financials in order, evaluating your numbers, measuring your success, and exploring opportunities to grow your business. There are many things to consider concerning the overall health of your business:
1. Tax Compliance: Are you prepared to file your tax returns on time? Have you considered how coronavirus legislation has impacted your situation? Did you give gift cards during the holiday season? Gift cards given to employees count as taxable income and must be reported on form W-2, but people often incorrectly assume that gift cards are covered under de minimis fringe benefit rules.
2. Technology: Have you recently reviewed your technology needs and whether your current software systems are up to date and giving you the information you need? Technology is innovating faster than ever, but many businesses’ software systems are stuck in the past. And if you haven’t migrated your systems to the cloud, it’s time to explore your options—legacy systems are simply not structured for today’s model of success.
3. Cybersecurity: Cyber threats and cyberattacks have increased dramatically over the past decade. These attacks have exposed sensitive personal and business information, disrupted the critical operations of organizations, and imposed high costs on the economy and businesses. Do you have a plan in place for cybersecurity prevention, detection, and response? It is imperative you stay informed about the continuously changing forms of cyber threats and develop appropriate, cost-effective controls to safeguard your business from data breaches.
4. Data Analytics: Are you able to use your data to make informed decisions? In the current business climate, it is imperative that your organization leverages your data to understand your business and make better, data-driven decisions. The ability to turn insight into action allows you to be both growth-focused and respond proactively to changing market conditions (something we are all too familiar with in “The Year of Disruption” 2020).
5. Human Resources: You spend a lot of time building up your organization and perfecting your product. But what about your people? As a small-business owner, staffing is vitally important, especially for organizations in growth mode. Often, human resources is overlooked, especially as you’re trying to wear multiple hats. But it’s an essential component of any organization and critically important to get right.
6. Wealth Planning: How has COVID-19 affected you financially? Are your tax and investment decisions working together? Do you know the tax impact of liquidating one asset versus another? Do you have an investment strategy? Have you thought about the type of legacy you would like to leave? Understanding your wealth and planning for your financial future are important.
7. Retirement Plans: Have you reviewed your company’s retirement plan? Have you reviewed the proper reporting requirements based on the size of your plan and its participant numbers? There are many things to consider depending on the size and anticipated growth of your business.
8. Outsourcing Needs: Have you evaluated whether now is the time to outsource your payroll and bookkeeping services? Have you considered whether hiring an outsourced CFO partner could help you grow your business? There’s a lot to consider when it comes to the financial and accounting portion of your business.
9. Exit Planning: Have you thought about selling or acquiring a new business? Have you considered the tax implications of a sale/purchase? We encourage business owners to consider options at least five years before they intend to sell, if not 10. It’s important to continue to plan, even in times of market volatility and uncertainty. A comprehensive exit plan will allow you to adapt to prevailing conditions and achieve your long-term business and personal financial goals, even in the wake of COVID-19.
10. Fraud: The COVID-19 pandemic has made it more challenging to deal with fraud risks. Have you done a review of your internal controls to ensure you’re keeping your business protected? Although a business may be unable to completely prevent fraud from occurring, the business should be able to detect fraud when it happens to minimize any losses.
Focusing on these 10 areas will give you the opportunity to take a holistic approach to evaluating where you’ve been, decide where you’re going, and ensure that you get a strong start to 2021.
Angie Ziegler is National BOS Sr Manager at Eide Bailly. You can reach Angie at email@example.com or 507.386.6228.