Your 10-point checklist to ensure that your company is in good shape and ready for all the challenges and opportunities that 2021 may bring.
by Jamie O’Hanlon, Managing Director, Avid Partners
Business owners are at the end of a particularly challenging year and are entitled to look forward to some well- deserved time off over the festive season. However, there is still week or two to go and taking the time for an end of year review is a worthwhile activity.
In this article, Jamie O’Hanlon, Avid Partners, looks at points to consider in an end of year business review to ensure that your company is in good shape and ready for all the challenges and opportunities that 2021 may bring.
Not every task on this checklist will apply, however checking off even some of these suggestions can help you and your business start 2021 off on a better financial note. So, let’s get started.
1. Assess business performance and plan ahead
This is a great time to take stock and review how business has performed over the year. Are you clear about the key costs and income drivers in your business? Do you have metrics in place to track both? Identify how you can make the most of your market opportunity and decide where to take your business next. You will need to revisit and update your business plan with your new strategy in mind and talk to you accountant or business advisor to discuss any changes you are planning. Do you need finance; new staff; sales & marketing support; are there any grants available to help you develop your product or service idea?
2. Keeping cash in your business
Talk to your accountant about setting up a 12-month cash flow which will is an essential tool for any business owner. The current environment demands a close eye be kept on cash in and cash out. Cash flow is a living document that allows you to put controls in place and assess your financial situation at a glance: seeing potential cash gaps before they happen and allowing you to put plans in place to minimise or avoid them.
3. Review debtors and creditors
Time for some housekeeping! An end of year review of your invoices and bank statements will help you track outstanding debtors, creditors, cash on hand and bad debts at the year-end. You or your accountant should write off any bad debts that are not likely to be paid. Similarly, review Stock and Work in Progress and record information for your management accounts
4. Get a head start on your taxes
Tax season is nearly behind us and the truth is that many of us won’t start thinking about it again for several months, however there are some money tasks you might like to focus on before year’s end that can save your business money and put resources back in the coffers! Tax is a cost just like any other however it is one that can be managed and reduced with proper planning and advice. Check out our recent article outlining common strategies that can lead to real savings which will impact the bottom line.
5. Time for a pension top up?
If you have had a good trading year, you may consider topping up your pension plan? There are tax benefits to contributing to a pension plan however payments must be made before the end of the tax year. Note that the tax treatment of company payments to pension plans is different from that of individuals topping up their personal pensions. Speak to your accountant who will be able to advise you further.
6. VAT registered?
Are you VAT registered? If not, year’s end may be the time to check your turnover for the last 12 months. If you have reached the turnover threshold for VAT – €37,500 for the sale of services and €75,000 for the sale of goods. You can register for VAT at any time you estimate the company is nearing this threshold however, this time of year is a good time to revisit.
*Note that a temporary reduction in the standard rate of VAT was announced by Government as part of the July Stimulus Package. On September 1st, 2020, the standard rate changed from 23% to 21%. The rate is due to revert to 23% with effect from 1 March 2021.
7. Time for some upgrades?
Self-employed? If you haven’t incurred many expenses so far this year, you might want to consider making some now: for example upgrading your office furniture – a more comfortable chair or screen setup; a home office renovation; or, you may consider upgrading your accounting records from excel to using an accountancy software package?
8. Expect the unexpected
One lesson we all have learned in 2020: expect the unexpected and be prepared for it. That means – if you can – having emergency savings, adequate insurance and a financial plan. Hopefully you have an emergency fund for just such occasions – 3-6 months’ worth of expenses. Dip in when necessary, then rebuild. Do you get a year-end bonus, consider using that to boost emergency savings or retirement savings.
9. Talk to your accountant
More than ever businesses need the advice of a good accountant. If you have not done so already, commit to keeping detailed records of all transaction within the business, monitor progress and keep your accountants informed of any changes, good and bad, so they can advise you accordingly. An accountant’s input can go beyond your bookkeeping requirements to provide expert advice and a strategic plan for the survival and growth of your business.
10. Next steps
Check off the items on the business review checklist and start the new year off right. Arrange a free consultation with us to talk through the specific aspects of your business and we will tailor a package to match your needs. You can phone us on 0818 303087 or email us at info@avidpartners.ie.
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