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Time to finally start thinking about turning the calendar from 2020 and into 2021. It’s also time to take stock and how things are going and to make plans for what we hope is a turnaround or even better new year. We here at Aliign want to provide a few key areas and things to think about.
Technology – If you aren’t already utilizing many of the automated features out there, then what are you waiting for? Automate, computerize, modernize, and streamline. There are numerous apps and programs out there to help ease your burden.
Don’t Disregard – Just because technology is out there, doesn’t mean it makes sense for everything. You need to stay involved and active in your business as well. The best technology helps streamline processes, but also provides meaningful information. Analyze your business and make sure your needs are met. What works for one business, may not be best for another.
Review your Financial Reports – There are 3 main reports every business owner should review:
- Profit & Loss – this report shows your total sales and revenues minus all expenses for the period
- Balance Sheet – this report shows a list of your assets, liabilities, and equity
- Accounts Receivable Aging – this report shows a detailed listing of how much money your customers owe you and how long those amounts have been outstanding
Details – Make sure to pay attention to the details. Below are some common mistakes business owners make and some key areas the IRS is focusing on:
- Employees vs. Contractors – Many business owners try to save payroll taxes and employee benefits by classifying people as contractors instead of employees. This can be a huge problem and open your business up to unneeded scrutiny and penalties. The IRS is cracking down on this area, so make sure the people you pay are classified correctly.
- Commingling expenses – Even though you own the business, do not pay for personal expenses with company funds. There are several legal reasons why this isn’t allowed, but it also shows a false picture of how your business is actually performing.
- Save Receipts – If you ever come under audit, credit card and bank statements are typically not accepted as receipts. Try to capture digital receipts for all purchases and save them for at least 3 years.
- Pay Taxes – This may seem obvious, but make sure all your taxes are paid and returns are filed timely. This includes income, payroll, sales, and any other types of taxes related to your business.
- Get an Accounting Professional – The SBA recently reported that up to 30% of new businesses fail in the first year, and more than 50% fail by Year 5. However, those small businesses who have an accounting professional looking over their finances can increase the odds of success by as much as 75%. Aliign has the experience and professionals in place to help you with all your small business accounting and bookkeeping needs, so please don’t hesitate to reach out if you need assistance or have any questions.