The end of 2020 is quickly approaching, and with the year’s end, business owners have opportunities. First is to celebrate! Despite setbacks caused by the pandemic, many businesses in our Corridor region accomplished a lot in 2020. It is important to spotlight and celebrate our achievements with employees, suppliers and customers.
Business owners know that employees are critical to their company’s success. Invest time and effort into providing feedback to your employees. Annual reviews are important and necessary. Visit with each team member to see how their year went, identify professional development goals for next year and define training opportunities and other pathways that will empower them to meet and exceed achievement milestones next year.
We can’t talk year-end without talking tax planning. Review your income statement, balance sheet and cash flow statement. When it comes to filing taxes, deductions are your friend. Saving money on taxes always feels good and ensures that you are taking advantage of government-sanctioned exceptions. One way you can increase your tax deductions is by investing in capital improvements near the end of the year. Consider purchasing new equipment or certain other business property that will qualify for a Section 179 deduction
for details). Under that deduction, business owners deduct all or part of the cost of certain qualifying property in the year you put that item into service. Only make investments that will improve the profitability of your business.
There is a certain amount of risk in running a business, and, unfortunately, some items just don't sell, and some debts can't get collected. While neither situation is ideal for any business, they are both deductible. Old inventory, or inventory that can no longer be sold, is deductible as an expense come tax time. Since inventory only gets expensed when it's sold, you can get rid of the items that can't be sold and deduct what you originally paid for them.
Donate to Charity
Many Northwest Iowa businesses donate a portion of their income to charity. Not only is a donation a noble and important act, it can help reduce taxable income. By donating to charity, you can better your business's finances. While money is always a great donation, items like clothes, shoes and toys can also go a long way. Be sure to keep receipts and other documentation to back up your deductions.
Backup your computer and your contacts. Review your website. Consider investments in online sales of product offerings or online appointment scheduling for service offerings.
A lot has changed in your business this year, and the same goes for your vendors. At the end of the year, verify that the contact information, including phone number, email address and contact name, are still correct for each of your vendors. Purge the system of any inactive vendors or inaccurate information.
Set Goals for the Coming Year
2021 can be better than 2020 for your business if you are deliberate in planning your path forward and measuring your progress.