As much as all of us would like to see 2020 in our rear-view mirrors, it has never been more important to make sure all of your records are in order, and to make a plan for your business. While all the usual year-end tasks are still on the docket, you need to consider implications related to COVID-19.

The business climate this year has drastically changed our outlook in many ways, and it’s important to make sure you move out of 2020 with a solid plan. That plan starts with your year-end.

Here's a checklist to help your business prepare for a great year-end while incorporating 2020 specific implications into your usual year-end functions. It’s a three-pronged approach: get organized, strategize with tax in mind, and make a plan for 2021 and beyond.

Get organized

1. Your books: Now is the time to collect, organize and file all of your receipts for the year. Make sure all salient transactions are recorded in a way that makes sense and clearly communicates the activity. These records are key to getting the quality financial statements needed in Step 2.

2. Your finances: Give your balance sheet, income statement and cash-flow statements a good hard look. Reviewing this information allows you to see where your money went during the year so you can properly prepare for next year. Did it come together the way you expected? This can help you catch errors and avoid surprises come tax time. Your CPA can help you figure out what to look for, or what to do with your findings.

3. 2020 programs: Whether you received a PPP loan, Economic Injury Disaster Loan or any of the other smaller programs that came about to help your business survive the coronavirus pandemic, take the time now to put together a summary of what program you participated in and to what extent. Then, look into the longer-term impacts of those programs on your finances. This could include forgiveness applications, repayment schedules or modified tax reporting. Work with your CPA and banker to get a clear picture of how pandemic assistance affects your business’s future.

4. Planning records: Now that you have organized these key parts, keep them together. Keep a 2020 file that holds onto the relevant information in a logical manner. It is likely you’ll have to review these things a number of times, so make it easy to get to.

5. Investigate new tech: After organizing your records, you may have noticed all of the manual tasks and repetitive processes involved in your record keeping. Consider investing in data analytics or automation tools to streamline your in-house accounting and tax functions.

Review your tax strategy

6. Make a plan – Meet with your CPA early and develop a tax plan. If you have never done this before, now is the time to start. If you usually push it until the new year, get it done before the holidays. COVID-19 has made the business reporting environment incredibly complex, and there is potential for hidden impacts. Getting your business financials reviewed now will reduce the number of nasty surprises and set you up to weather 2021 without shocking tax bills.

7. Execute your plan:

Your CPA will give you a number of strategic planning opportunities that need to be put in motion before the end of the year. Get the ball rolling on things like:

a. Accelerating AMT refunds: The CARES Act has accelerated the alternative minimum tax following changes made by the Tax Cuts & Jobs Act. Corporations can claim all remaining credits in 2018 or 2019 thus allowing for filing of quick refunds.

b. Using current losses for quick refunds: The CARES Act allows businesses to claim immediate refunds by using current losses against past income, for example.

c. Submitting a retroactive refund for bonus depreciation: Businesses can now deduct qualified improvements dating back to Jan. 1, 2018, thanks to a fix made by the CARES Act. This could offer a quick refund.

d. Claiming quick disaster loss refunds: Nearly every U.S. business is eligible for disaster-related refunds from losses in 2020 on an amended 2019 return for a quicker refund.

e. Timing out your payroll tax deduction: While the CARES Act allows employers to defer paying their share of Social Security taxes, you should review the best strategy with your accountant. In some cases, it’s better to pay on time to take a loss. In others, it provides a liquidity benefit.

f. Cash in on generous Section 179 deduction rules: For qualifying property placed in service in tax years beginning in 2020, the maximum Section 179 deduction is $1.04 million. The Section 179 deduction phase-out threshold amount is $2.59 million.

8. Prepare your tax documents: Get a list from your CPA in your planning meeting, and gather all of the information now. As we discussed in prong 1, getting and staying organized will greatly reduce headaches and the chance that something is missed when your taxes are prepared.

Plan for the future

9. Check in on your goals: 2020 changed everything, and it’s likely the steps you intended to take toward your business goals were modified or completely changed. Review your goals holistically — not just on the basis on which steps you could or could not complete. It may be that 2020 provided a different option or eliminated a step.

10. Get flexible: There’s only one thing for certain in 2021 — uncertainty. Work with your trusted advisor to build adaptability into your business model.

In a year like no other, it’s crucial to prepare like no other so you’re not met with any surprises or fees.

Siobhan O'Connor is a Certified Public Accountant with Cordell, Neher & Company PLLC, a Wenatchee public accounting firm. She is a graduate of Washington State University, with a bachelor's degree in business administration, with a major in accounting and a minor in agribusiness economics. She may be reached at 663-1661.