The 12 Days of Year-End Business Planning

Dec 3, 2020 | Estates Planning and Asset Protection

As we move into the holiday season, it’s time for (socially distanced) celebrations with friends and family—and preparing for the end of the financial year. 

To help you on your way, we’ve put together a checklist for year-end business planning. We’ve got you covered—even if someone gives you a partridge in a pear tree. (Once you get over the surprise, we recommend ordering some birdseed and enjoying those pears.)

1. Review Contracts

Start by looking over your contracts. 2020 has been a challenging and unprecedented year, and what works best for your business may have changed dramatically over the last nine months. 

While the development of vaccines has sparked some much-needed hope, social distancing restrictions will probably remain well into 2021. And even when they’re finally lifted, things won’t go back to exactly how they were. Expectations have changed. So take some time to make sure your contracts fit your new normal.

2. Get Your Books in Order

Set yourself up to start 2021 right by getting your books balanced before the end of the year.

Make sure you’ve received payments, sent out any invoice reminders, and paid outstanding vendor bills. Compile expenses. Transfer journal entries to your general ledger and determine your trial balance. Make adjustments and reconcile your accounts.

Not only do you need to do these tasks, but having your numbers for 2020 can help you make informed decisions as you plan for 2021.

3. Do Your Tax Planning

Use the last weeks of 2020 to plan for taxes. Pay attention to income and expenses around the turn of the year and be aware of whether transactions will be recorded as happening in 2020 or 2021.

The incoming Biden administration may raise taxes for those with incomes over $400k. If you think you may be affected by new tax laws, can you fast track any payments, like year-end bonuses, for 2020? Or can you delay any expenses until early 2021?

4. Evaluate Trust Options for Asset Protection

As part of planning for a potential change in tax laws, you may also want to look at trust options for protecting your assets at the current gift and estate tax rate. (The Biden administration would like to bring the tax-free threshold from $11.5 million back down to $3.5 million.)

There are many kinds of trusts—for spouses, kids, college funds, businesses, charitable giving, and more—that may be worth looking into.

5. Create or Revise Your Essential Documents

Update essential documents – and not just your last will and testament. Don’t forget about the other three essential documents that help you prepare for the unexpected turns life can take.

  1. Durable power of attorney lets you designate someone to oversee your finances—bills, mortgage, etc. – if you’re incapacitated or temporarily unable to do so yourself. 
  2. Medical power of attorney names the person who will make health decisions for you. 
  3. And a directive to physicians gives you the chance to state your preferences for medical treatment, such as whether you’d want to be kept on life support.

Essential documents aren’t pleasant to think about, but they’re necessary and need to be revisited from time to time.

6. Plan Your Charitable Giving

Now for a fun one! Charitable giving is tax-deductible, and plans like a charitable remainder trust can let you receive a tax deduction while continuing to earn annuities on your donated amount. So support a worthwhile cause—and save on your taxes.

7. Take Time for Mental Health

A smart choice at any time, tending to your mental health is especially important during the bustle of the holidays—and in such a challenging year. 

Stress affects the quality of our decisions, and a lack of sleep mimics the impairment of having a few drinks. Meditation apps like Calm, Headspace, and Insight Timer can provide support—or just a good place to start.

8. Avoid a Home Alone Scenario—Estate Plan for your Kids

In the classic 1990 movie, Kevin’s parents only left him alone for a few days—and he ended up having to protect himself with a blowtorch! 

But seriously, in thinking about your kids’ future, it’s worth planning for a situation where you might not be around to directly support them. Estate planning helps you prepare for getting your kids through a worst-case scenario—without needing to resort to a blowtorch.

9. Check Your Beneficiary Designation

And while you’re planning for your loved ones, check the beneficiary designation on your life insurance policy and other assets. Make sure it’s up-to-date and reflects your current wishes.

10. Plan Your Business Insurance for Next Year

Just as with your contracts, your business insurance needs or rates may have changed in 2020. Take a moment to review your options. Yes, the future’s unpredictable, but you’ll still benefit from making a grounded decision now.

11. Shop Locally

Support your community and do your holiday shopping locally! 

Many businesses have curbside pickup and will work with you over the phone to find what you need. Your gift recipients will appreciate the thought and personalization possible with shopping small. And community is something we create together—so do your part and support local businesses.

12. Pat Yourself on the Back—and Enjoy Some Eggnog

Running a business may be rewarding, but it isn’t easy. Take a moment to appreciate your hard work and accomplishments—as well as a holiday beverage.

And if those two turtledoves or three French hens show up on your doorstep – well, you’re probably going to need even more birdseed. And eggnog.

If you have a question about business or estate planning, contact us to schedule a consultation. Our experienced Texas attorneys can guide you through the process.


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