Time For 2020 Business Foresight!

new year 2020 street sign

By Sylvan Murphy

The 4th Quarter is great time to evaluate your business, prepare for year-end accounting, and set goals for the new year. Following is a checklist to make this process easier for everyone involved:

Review your accounts receivable, and if you haven’t been sending statements, get them out immediately. Reach out to your clients and try to collect any outstanding balances before year-end.

Review your accounts payable and clear as much of the debt as possible.

Review the vendors you’ve used over the past year and check to see if they’ll need to be issued a 1099-Misc. If so, do you have an updated W-9 on file for them? The 1099-Misc forms need to be provided by January 31, so the more work that can be done ahead of time the better.

Review your local and state revenue-tax filings and reconcile the reporting with your Profit and Loss (P&L) statement to verify that no income has been over- or under-reported.

Review your payroll records and employee files. You’ll want to ensure that all of the necessary employee information is up to date for the year-end reporting. The W-2’s have the same January 31 deadline as the 1099-Misc forms.

Review your balance sheet, paying special attention to your fixed assets. Did you buy or sell any machinery or equipment over the past year, and were the amounts entered correctly? Your tax preparer will need some information on any changes in your fixed assets to make adjustments, or depreciate the items over time.

Review your P&L to look for any possible errors or missing data. If you have more than one year of business data, it’s always a good idea to look at the current year versus the previous year to help identify items that may be missing. This also will help identify positive and negative changes in your operations. Look for improved sales numbers, and also review your cost of goods for any changes.

Review your cash receipts and verify that everything has been recorded. Some small-business owners occasionally use cash or a personal credit card to purchase smaller items. But, over the course of the year, these small purchases could add up to significant business expenses.

Review and total up any estimated tax payments you have made. Whether you’re filing your taxes or filing for an extension, you’ll need this number.

Schedule a meeting with your tax preparer. Ask how any new equipment that you’ve been thinking about purchasing for the business would affect your tax liability. Go over your current financials with them, and ask about a year-end payroll for the owners/officers to get an additional tax payment in or put money into a retirement account. Their insight and advice potentially could save you thousands of tax dollars.

Sylvan Murphy is the payroll technician at Unity HR in Bellingham.

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