Important year-end business finance questions to ask in 2021

As a very challenging year for business owners comes to an end, it’s important to get an overall view of your coronavirus-impacted finances. Do you have funding necessary to help your business post-holidays?

Here are some questions to ask yourself to ensure your success moving into the new economic normal.

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What’s important about year-end finances this year?

Because of the continuing COVID-19 pandemic, creating a plan for 2021 is more important than ever. Stimulus programs like the PPP and EIDL loan programs may have also impacted your business.

No matter how your business is structured, budgeting and creating a cash flow projection will be the key to rebuilding.

How is my cash flow projection?

Why is a cash flow forecast so important during this time? It isn’t enough to be profitable. To survive, your business should have the cash available when employees, landlords, vendors and other vital partners need to be paid. To do that, you must be able to effectively forecast and manage cash flow.

Evan Singer is general manager of SmartBiz and he shares the importance of forecasting and managing cash flow.

Singer says, “As we all know, cash is king for a small company. So they have to build an actual cash flow forecast to understand how they’re going to grow their business over time.”

A small business cash flow projection reveals the breakdown of money expected to come in and out of your business. This includes calculating your income and all of your expenses, which will give your business a clear idea on how much cash you'll be left with over a specific period of time.

What’s my tax situation?

Taxes are never simple, but the legislative uncertainties of 2020 could mean an unusually complicated year. Avoid headaches and unnecessary costs by going over your tax obligations with a financial professional.
If you’re ever audited by the IRS, having your expenses combined will create a logistical nightmare.

To avoid headaches, open a business checking account. In addition to helping out at tax time, this step can help you build strong business credit as well. Check out this blog post for more in-depth information about business credit cards: Six Benefits of a Business Credit Card.


Am I well set up for continued remote work and operations?

Businesses across America have pivoted to remote work. Millions of people will continue working from home for the foreseeable future and this can have significant financial impact on your bottom line. If you’re leading a remote or semi-remote workforce, pay attention to these issues:

  • Work-from-home compensation policies: Employees working from home can bring about unexpected costs and legal risks. How much are you budgeting for at-home office supplies? Are you paying for internet access and additional computer components. Note that supplies you purchase for your employees counts as taxable compensation, which could come back to bite you—and them—during tax time.
  • Cybersecurity: According to Wikipedia, computer security, also known as cybersecurity or IT security, is the protection of information systems from theft or damage to the hardware, the software and to the information on them. Cybersecurity strategies include controlling physical access to the hardware as well as protecting against harm that may come via network access. Security breaches can happen due to malpractice by operators, whether intentional or accidental. Users can also be tricked into deviating from secure procedures. Your accountant or bookkeeper can help you protect your organization’s sensitive financial information remotely.
  • Employee connectivity and engagement: It's difficult to say how things will look when the dust settles and coronavirus fades away. All anyone knows for certain is that the world will have changed. Keep your workforce safe and secure, and your business can change with it. Here are resources from the SmartBiz Small Business Blog to keep your employees engaged and safe:

How is my debt situation?

When you run a business, whether you’re a startup or you’ve been in the game for a long time, you’re almost definitely going to need to get money from other people at some point. You might want to expand your business, knowing fully well that demand is there, but don’t have the cash on hand to speed up production - that’s when taking on some debt can be a boon.

Not All Debt Is The Same

When you’re considering how much debt is too much, it’s important to keep in mind that different debts will affect your business differently. When you’re not paying back bank loans, interest is going to pile up and you’re going to have a hard time finding people to lend to you in the future. When you don’t pay back suppliers, you’re not only hurting your reputation, but you’re also damaging your reputation with that supplier - sometimes beyond repair.

How Much Debt Is Too Much?

There’s no fixed dollar amount for how much debt is too much. You can use a number of hands-on approaches to know if you have too much debt. Are you missing monthly payments? You probably have too much debt. Are you constantly stressed about your debt levels? You probably have too much debt. Some of the guidelines used for business debt are quite similar to those used for personal debt - when it’s too much, you can often feel it.

Managing Debt

Managing your small business debt can be broken down into three things: taking on the right amount of debt, paying off the right debts, and handling situations where you’ve taken on too much debt.

When it comes to paying off debts, it’s important to look at the terms of each debt and determine which ones should take priority. Things to look for include steep consequences for defaulting, high interest rates, and the importance you place on your relationship with the lender. After all, if you only have one supplier for a niche product, you might give that debt precedence over even a high interest loan.


When you have too much debt, there are a number of options at your disposal. Understanding what debt can be written off can help you decide whether you want to restructure your debts, negotiate with your creditors, or file for bankruptcy.

Do I have marketing initiatives in place?

Getting a handle on the entire marketing process for a difficult year can be overwhelming. However, a solid marketing plan can help you organize and move forward.
Typically, a marketing plan is included in your overall business plan and details how to reach a targeted demographic. It’s a roadmap to help you introduce your product or service to potential customers. A marketing plan doesn’t need to be lengthy but takes some research and work. For a step-by-step guide, visit the SmartBiz Small Business Blog: How to Create a Marketing Plan in 8 Steps.

Final thoughts

When 2021 is in full swing, you’ll be well set up for the challenges ahead. Stay on top of the news out of Washington regarding financial relief and funding programs next year. And if you need help, reach out to a financial professional or explore SBA (Small Business Administration) programs tailored to rebuilding.