End of Year Bookkeeping Tips: Preparing for 2021

We are quickly approaching the end of 2020. This year many construction companies, small businesses, and restaurants lost money due to COVID-19. The upcoming year is a fresh start for everyone. With these bookkeeping tips, you can stay optimistic and improve your business after the pandemic.

Now is the perfect time to sit down and analyze your business finances. Create a plan to save money, increase profits, and ensure success. Stay prepared for the upcoming year. Follow these bookkeeping tips to end the year smoothly and plan for 2021.

Submit Tax Forms

Although Tax Day (April 15, 2021) seems far away, you want to give your accountants time to file tax forms. Try not to wait until the last minute in case you need to fix any information. Additionally, these common mistakes on your taxes should be avoided.

Gather important information from your vendors. This includes their name, address, and tax ID number. If your business works with 1099 contract workers, be sure to prepare and submit those forms by January 31, 2021.

Bookkeeping: Plan a 2021 Budget

Create a new budget for the year based on the previous year. Keep track of what your money is going towards. Budgets put you in the right standing and prevent you from spending money on unnecessary products and services.

If you are looking for new vendors, do it at the beginning of the year when they are giving out discounts for new customers. The right vendor will be reasonably priced and provide quality products to your company. Make note of the vendor expenses so you can make your payments on time.

Bonuses and Holiday Gifts

You might still have room in your budget at the end of this year to give back to your hardworking employees. If you decide on using that money towards an end-of-the-year bonus, keep in mind that taxes are involved. These are taxed differently than normal paychecks. Check with an accounting professional if you are unsure of tax laws.

There may also be room in your budget to purchase holiday gifts for employees, customers, or clients. Although you may want to gift them with something expensive to show your appreciation, remember that you have a budget for a reason. Choose gifts that they will enjoy while staying within your means.

Set and Review Bookkeeping Goals

Measure the success of your yearly goals. You may need to reevaluate or work on some goals. Use these as benchmarks for the next year. Remember that your goals can be quantitative and qualitative. Measure sales, financial statements, customers, and the satisfaction of yourself and customers.

Get Ready for the New Year

PL Consulting hopes that you enjoy the holidays. Use these business tips to end the year strong and prepare your business for the new year.

Do you want to learn more about bookkeeping, budgeting, taxes, or goal setting? We are here for all the questions you have as a business owner. If you would like to set up an appointment, call us at 410-764-3731.