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December 31, 2020

The New COVID Relief Bill

The New COVID Relief Bill
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On Wednesday, December 30th, Roth&Co, in conjunction with Agudath Israel of America, hosted a webinar detailing the new COVID relief bill and its many provisions. It was presented by Ahron Golding, our in-house tax controversy attorney, and moderated by Rabbi Shlomo Soroka, Director of Government Affairs, Agudath Israel of Illinois. There were opening remarks Rabbi Abba Cohen, Vice President of Government Affairs and Washington Director and Counsel, Agudath Israel of America. You can watch the full video here.

 

This overview below will cover important points about the new Paycheck Protection Program, Employer Retention Tax Credits, FFCRA credits, unemployment, and stimulus checks. With this information, you will be prepared to speak with your professional advisors about how these initiatives may benefit you and your business. We are expecting new guidance to be issued by the SBA within the first week of January 2021 that will clarify further details.

Please note that while we are sharing what we currently know, some details are still changing. We will continue to keep you updated as additional information becomes available. This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for legal or tax advice.

PAYCHECK PROTECTION PROGRAM: ROUND 2

Here are the highlights:

·For PPP2, eligible borrowers must employ no more than 300 employees. It includes all employees, both part-time and full-time.

·The borrower must show a 25% reduction in gross receipts in any quarter of 2020 from the corresponding quarter of 2019.

·Loans under $150k will get a much simpler, one-page forgiveness application with no back-up documentation necessary. We should know more about the application within the month.

·The expenses that the borrower paid using PPP1 loan monies are now tax deductible even though the loan is forgivable.

·The borrower does not need to have received or applied for forgiveness in order to apply for PPP2 but will need to certify that the first round monies were used or will be used.

·You can apply for new PPP until the end of March 2021, or until funds run out.

·The loan monies must be spent within 8-24 weeks from when you get the loan, however, you can now choose any period over those weeks.

·Seasonal businesses, like summer camps, are now eligible to apply. Choose any 12-week period between February 15, 2019 and February 15, 2020 to calculate average monthly salaries. Bear in mind that you will have to spend the monies within 24 weeks of the loan, even if you are not ‘in season’.

 Changes made to the original PPP that apply to Rounds 1 & 2:

·EIDL grants will no longer reduce PPP forgiveness.

·PPP2 expanded allowable expenses to include operating expenses necessary to operate remotely, property damage costs caused by protests, supplier costs and worker protection expenditures (e.g., plexiglass, masks and signage to maintain social distancing).

·Allowable payroll costs have also expanded. It now includes vision, dental and group life.

Here’s what stayed the same:

·PPP2 loans will still be required to certify that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.

·The same affiliation rules probably still apply.

·The same FTE rules (maintaining employee headcount and safe harbors) probably still apply. We’ll know more when the SBA issues its guidelines.

·The loan amount is still 2.5 times the average qualified monthly salaries for 2019. If you are in the hospitality business (NAICS Code 72) the loan amount jumps to 3.5 times the average qualified monthly salaries for 2019.

Open questions about PPP:

·We reached out to the SBA to explain what is included in “gross receipts” – specifically as it relates to school lunch programs and provider healthcare relief funds.

·How will gross receipts will be determined – on a cash or accrual basis?

·We also asked the SBA to clarify whether businesses with more than 300 employees qualify if they meet the alternative size standards.

Next Steps:

·Review your accounting records to see if you had a 25% decrease in revenue.

·Check if your employee count is less than 300.

·Reach out to the bank that processed your first PPP round and ask them if you can use the same application for round 2, and what other documentation is needed.

EMPLOYEE RETENTION TAX CREDIT

 Many individuals and businesses may rush to take advantage of the new round of PPP, but the new Employee Retention Credit being offered may prove to be even more advantageous. The Federal Government wants to encourage businesses to keep on paying their employees. You may qualify for this credit if your business experienced a significant decline in revenue or was shut down by government order.

Under the new law you can now be eligible for both PPP and the employee retention tax credit. This even applies retroactively to 2020. Many people did not pay any attention to this credit because in the old law you couldn’t do both.

The credit is for qualified wages paid after March 12, 2020 and before July 1, 2021. There are big differences between the credit as applied to 2020, and as applied to 2021.

Advantages of ERTC over PPP:

·It does not require certification of necessity.

·You do not need to apply with the bank or SBA. It is handled directly by IRS on your payroll tax return.

·There is no forgiveness application.

·The money will not “run out”; it is a credit on your payroll taxes.

·There is no maximum number of employees (although it might make a difference in the calculation of the credit).

Bottom line: How much of a credit can I get?

For 2020 the max is $5,000 per employee and for 2021, $14,000 per employee. This can add up to a lot of money!

In many cases, this credit can exceed the PPP amount, especially in 2021. However, it is important to know that you can’t claim the same wage dollars for both ERTC and PPP forgiveness (no double dipping).

Other important considerations:

·A business needs to make sure they are not taking PPP, ERTC and FFCRA on the same dollars. They all have different rules and regulations that apply to each of them. Since you cannot get both the retention credit and PPP on the same dollar spent, you might need to make a calculation which will be more beneficial for your individual business.

·Another important caveat to consider: Clergy pay is not considered qualified wages for this credit. Consider this if much of your staff is being paid parsonage.

·If your credit exceeds your income, you will get that excess refunded from the Government.

·You may be able to get an advance on this credit if you believe you are eligible.

·Regarding qualifying for and calculating the credit: There are numerous variables and details that are beyond the scope of this update. The variables include which year the credit is being taken for, how many full-time employees the company averaged in 2019 and how significant the drop in gross receipts was for the business. Please check with your professional advisors so that you can properly determine whether you would qualify for this tremendous credit, and how it would potentially interact with the PPP. The IRS does a good job at explaining the 2020 credit with examples and FAQs.

FAMILIES FIRST CORONAVIRUS RESPONSE ACT

The Families First Coronavirus Response Act (FFCRA) is a mandate that provided emergency sick leave to employees for up to two weeks due to COVID, and up to an additional ten weeks if they missed work due to caring for a child that was home because of school closures.

How it works:

· The Federal Government then provided a dollar-for-dollar credit on payroll taxes that refunds the business the amounts they paid to employees for this qualified leave.

·FFCRA is subject to rules and regulations about how much credit can be claimed and what documentation is needed.

·While employers are no longer required to provide emergency sick leave after 2020, there is an extension of the tax credit until March 31, 2021, should a business choose to provide this leave.

FEDERAL UNEMPLOYMENT BENEFIT

The Federal Government extended unemployment benefits and will be supplementing regular state unemployment benefits by $300.

THE STIMULUS CHECK

Individuals earning less than $75,000 or $150,000 as a couple (based on your 2019 income) will receive $600 each, including qualifying children. Direct deposits have already started!

Roth&Co is committed to keeping you apprised of all provisions that may benefit you, your business or your organization. We will provide more information as it becomes available.

This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.

 

December 30, 2020

Ring in the New Year With a Renewed Focus on Profitability

Ring in the New Year With a Renewed Focus on Profitability
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Some might say the end of one calendar year and the beginning of another is a formality. The linear nature of time doesn’t change, merely the numbers we use to mark it.

Others, however, would say that a fresh 12 months — particularly after the arduous, anxiety-inducing nature of 2020 — creates the perfect opportunity for business owners to gather their strength and push ahead with greater vigor. One way to do so is to ring in the new year with a systematic approach to renewing everyone’s focus on profitability.

Create an idea-generating system

Without a system to discover ideas that originate from the day-in, day-out activities of your business, you’ll likely miss opportunities to truly maximize the bottom line. What you want to do is act in ways that inspire and allow you to gather profit-generating concepts. Then you can pick out the most actionable ones and turn them into bottom-line-boosting results. Here are some ways to create such a system:

Share responsibility for profitability with your management team. All too often, managers become trapped in their own information silos and areas of focus. Consider asking everyone in a leadership position to submit ideas for growing the bottom line.

Instruct supervisors to challenge their employees to come up with profit-building ideas. Leaving your employees out of the conversation is a mistake. Ask workers on the front lines how they think your business could make more money.

Target the proposed ideas that will most likely increase sales, cut costs or expand profit margins. As suggestions come in, use robust discussions and careful calculations to determine which ones are truly worth pursuing.

Tie each chosen idea to measurable financial goals. When you’ve picked one or more concepts to pursue in real life, identify which metrics will accurately inform you that you’re on the right track. Track these metrics regularly from start to finish.

Name those accountable for executing each idea. Every business needs its champions! Be sure each profit-building initiative has a defined leader and team members.

Follow a clear, patient and well-monitored implementation process. Ideas that ultimately do build the bottom line in a meaningful way generally take time to identify, implement and execute. Don’t look for quick-fix measures; seek out business transformations that will lead to long-term success.

Many benefits

A carefully constructed and strong-performing profitability idea system can not only grow the bottom line, but also upskill employees and improve morale as strategies come to fruition. Our firm can help you identify profit-building opportunities, choose the right metrics to evaluate and measure them, and track the pertinent data over time.

December 28, 2020

Your Taxpayer Filing Status: You May Be Eligible to Use More Than One

Your Taxpayer Filing Status: You May Be Eligible to Use More Than One
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When it comes to taxes, December 31 is more than just New Year’s Eve. That date will affect the filing status box that will be checked on your 2020 tax return. When filing a return, you do so with one of five tax filing statuses. In part, they depend on whether you’re married or unmarried on December 31.

More than one filing status may apply, and you can use the one that saves the most tax. It’s also possible that your status could change during the year.

Here are the filing statuses and who can claim them:

  • Single. This is generally used if you’re unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.
  • Married filing jointly. If you’re married, you can file a joint tax return with your spouse. If your spouse passes away, you can generally file a joint return for that year.
  • Married filing separately. As an alternative to filing jointly, married couples can choose to file separate tax returns. In some cases, this may result in less tax owed.
  • Head of household. Certain unmarried taxpayers may qualify to use this status and potentially pay less tax. Special requirements are described below.
  • Qualifying widow(er) with a dependent child. This may be used if your spouse died during one of the previous two years and you have a dependent child. Other conditions also apply.

How to qualify as “head of household”

In general, head of household status is more favorable than filing as a single taxpayer. To qualify, you must “maintain a household” that, for more than half the year, is the principal home of a “qualifying child” or other relative that you can claim as your dependent.

A “qualifying child” is defined as one who:

  1. Lives in your home for more than half the year,
  2. Is your child, stepchild, foster child, sibling, stepsibling or a descendant of any of these,
  3. Is under 19 years old or under age 24 if enrolled as a student, and
  4. Doesn’t provide over half of his or her own support for the year.

If a child’s parents are divorced, different rules may apply. Also, a child isn’t eligible to be a “qualifying child” if he or she is married and files a joint tax return or isn’t a U.S. citizen or resident.

There are other head of household requirements. You’re considered to maintain a household if you live in it for the tax year and pay more than half the cost. This includes property taxes, mortgage interest, rent, utilities, property insurance, repairs, upkeep, and food consumed in the home. Don’t include medical care, clothing, education, life insurance or transportation.

Under a special rule, you can qualify as head of household if you maintain a home for a parent even if you don’t live with him or her. To qualify, you must claim the parent as your dependent.

Determining marital status

You must generally be unmarried to claim head of household status. If you’re married, you must generally file as either married filing jointly or married filing separately — not as head of household. However, if you’ve lived apart from your spouse for the last six months of the year, a qualifying child lives with you and you “maintain” the household, you’re treated as unmarried. In this case, you may qualify as head of household.

Contact us if you have questions about your filing status. Or ask us when we prepare your return.

December 24, 2020

The Balanced Scorecard Approach to Strategic Planning

The Balanced Scorecard Approach to Strategic Planning
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In the early 1990s, the Balanced Scorecard approach to strategic planning was developed to enable business owners to better organize and visualize their objectives. With 2021 shaping up to be a year of both daunting challenges and potentially remarkable recovery, your company should have a strategic plan that’s both comprehensive and flexible. Giving this methodology a try may prove beneficial.

Areas of focus

The Balanced Scorecard approach segments strategic planning into four critical areas:

1. Customers. Every business owner knows the importance of customer satisfaction but, to truly know and fulfill customers’ needs, you must identify the right metrics that measure it. Also identify the types of customers you want and, more important, can best serve.

Key question to ask: To fulfill our strategic objectives, how can we attract and retain the customers that build our bottom line?

2. Finance. Companies generally know how to measure their financial performance. However, they too often rely on finances as the only barometer of overall operational stability and success. Financial details are often lagging indicators because they reveal past events — not future performance. So, along with continuing to properly generate financial statements, also track data such as employee productivity and sales growth.

Key question to ask: To achieve our vision, how will our leadership and employees drive our company’s financial success?

3. Internal processes. To operate more productively and efficiently, identify problems and change the related processes. Simply paying closer attention to a shortcoming isn’t an adequate solution. For example, measuring productivity won’t automatically increase it. Your business must analyze the internal components of production — from design to delivery to billing and receipt of revenue — and implement process improvements.

Key question to ask: To meet our goals, in which business processes do we need to excel?

4. Learning and professional growth. Continuing education often calls for more time and effort than businesses are willing or able to devote. Learning must go beyond simply training new hires to include, for instance, mentoring and knowledge sharing through performance management programs. Many companies’ success depends largely on the development and preservation of intellectual capital.

Key question to ask: To accomplish our strategic plan, how can we better preserve and pass along knowledge, as well as encourage learning?

A multipronged effort

Compiling data under the Balanced Scorecard approach requires a multipronged effort. You might use a survey to gather customer info. Your financial statements and industry benchmarks should provide insights into finances. Employee surveys and open forums can illuminate internal operations. And a performance management consultant could help you target learning opportunities and methods.

We can assist you in identifying pertinent financial metrics and incorporating accurate analysis into your strategic plan to help you achieve your profitability goals in the coming year.

December 21, 2020

2021 Q1 Tax Calendar: Key Deadlines for Businesses and Other Employers

2021 Q1 Tax Calendar: Key Deadlines for Businesses and Other Employers
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Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2021. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 15

  • Pay the final installment of 2020 estimated tax.
  • Farmers and fishermen: Pay estimated tax for 2020.

February 1 (The usual deadline of January 31 is a Sunday)

  • File 2020 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
  • Provide copies of 2020 Forms 1099-MISC, “Miscellaneous Income,” to recipients of income from your business where required.
  • File 2020 Forms 1099-MISC reporting nonemployee compensation payments in Box 7 with the IRS.
  • File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2020. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2020. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. (Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944, “Employer’s Annual Federal Tax Return.”)
  • File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2020 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

March 1 (The usual deadline of February 28 is a Sunday)

  • File 2020 Forms 1099-MISC with the IRS if: 1) they’re not required to be filed earlier and 2) you’re filing paper copies. (Otherwise, the filing deadline is March 31.)

March 16

  • If a calendar-year partnership or S corporation, file or extend your 2020 tax return and pay any tax due. If the return isn’t extended, this is also the last day to make 2020 contributions to pension and profit-sharing plans.

December 15, 2020

Review Your Estate Plan in Light of a New Presidential Administration

Review Your Estate Plan in Light of a New Presidential Administration
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As President-elect Joe Biden moves forward with the transition and prepares for the inauguration next month, you may be wondering how the federal estate tax may be affected.

During the campaign, Biden pledged to roll back many of President Trump’s tax policies. In response to the Tax Cuts and Jobs Act (TCJA), Biden has promised a progressive approach to taxation, focused primarily on increasing the burden on high-income individuals and businesses.

Bear in mind that his odds of translating his proposals into legislation in the next couple of years largely hinges on the outcomes of runoff elections for the two Georgia seats in the U.S. Senate. Biden’s party needs to win both seats to take a majority in the Senate. These elections are scheduled for January 5, 2021.

Proposals for gift and estate taxes

The TCJA temporarily doubled the federal gift and estate tax exemption to $10 million (adjusted annually for inflation), through 2025. The 2020 exemption is $11.58 million for individuals and $23.16 million for married couples; for 2021, it’s $11.7 million and $23.4 million, respectively. These TCJA amounts are scheduled to expire after 2025 to $5 million for individuals and $10 million for married couples, adjusted annually for inflation.

Biden has proposed reducing the exemption to $3.5 million for estate taxes and exempting $1 million for the gift tax. He also favors imposing a top estate tax rate of 45%, from the current rate of 40%.

In addition, Biden would like to end the “step-up” in basis that spares beneficiaries substantial tax liability for capital gains on inherited assets that have appreciated in value, such as stock or a house. If a beneficiary sells an inherited asset now, the capital gains generated is the difference between the asset’s fair market value at the time of sale less the stepped-up basis (the fair market value of the asset at the date of the deceased’s death), rather than the basis at the date of the original purchase. Without the step-up in basis, the capital gains generated on sale would be a larger amount.

Review your estate plan

As mentioned above, the ability of Biden to implement his proposals rests largely on the outcome of the Georgia runoff elections for Senate early next month. In the meantime, it would be worth your while to review your estate plan and make any necessary revisions. Potential tax law changes are a reason to trigger a review, as well as life changes, such as a marriage, the birth of a child or a divorce. Please turn to us for help reviewing your plan and making changes based on your specific circumstances.

December 14, 2020 BY Simcha Felder

Employee Motivation During the COVID Pandemic

Employee Motivation During the COVID Pandemic
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As the COVID-19 pandemic continues to disrupt work environments across the globe, business leaders should be aware of how they can motivate employees and improve morale. Increased stress, frustration and loneliness have lowered morale at many firms. Low employee morale can result in poorer work quality and employees who are more disengaged.

Business leaders and academics have studied what motivates people at work for years and different leaders have proposed different theories. In the Harvard Business Review, authors Lindsay McGregor and Neel Doshi identify six motivators – three positive and three negative – that influence work performance and motivation.

  • Play is when an employee is motivated by the work itself because they enjoy the activities of the work.
  • Purpose is when an employee values the work’s impact.
  • Potential is when the work enhances an employee’s future employment potential, i.e. promotion or advancement.
  • Emotional pressure such as fear, peer pressure, and shame.
  • Economic pressure is when an employee works to gain a reward or avoid a punishment.
  • Inertia is when an employee continues working because they worked yesterday and the day before, however they can’t explain why they are actually working.

The work of many researchers has found that the first three motives tend to increase performance, while the latter three hurt it. Companies with successful business cultures — from Southwest Airlines to Trader Joe’s — tend to maximize the good motives, while minimizing the bad ones.

As a result of the COVID pandemic, emotional pressure and economic pressure have increased for almost all employees as people worry about losing their jobs, paying their rent and protecting their health. Likewise, many employees are seeing their positive motivators threatened as they are finding it more difficult to connect with colleagues and clients. For example, employees may miss problem-solving with colleagues or face-to-face interaction with clients. The nature of communication and teamwork is changing in most work environments, whether employees are working remotely or not, and your employees may be questioning how much they enjoy these new changes.

So, what can you do to build and maintain a high-performing culture that continues to motivate your employees in this ever-changing world?

  • Effective Communication. It seems simple, but the more information you can share and the better you can communicate, the more your employees will feel valued. Remember that communication is a two-way street and in an evolving business climate, getting feedback from employees can help you determine what works and what does not. Soliciting ideas from employees reinforces your commitment to them.
  • Routine Meetings. With so much uncertainty in the world, developing a few routines can be reassuring. Holding a short reflection meeting with your team once a week, either in-person or through an online video platform, helps employees feel less isolated. It can also be an excellent way to encourage collaboration between employees and gives you an opportunity to recognize exceptional staff and their contributions.
  • Give Employees Freedom, Trust and Flexibility. Our world is in flux and many employees may need flexibility balancing their work lives with their personal lives. Be flexible and loosen some work restrictions where you can. That flexibility should also extend to employees’ roles. Think about where employees could be free to experiment and make that clear. Trust your employees to fulfill their potential and you will see your employees’ motivation renewed.

It is important for businesses to remember that a crisis, such as COVID, tests a company’s leadership and culture. Many new values can be formed under the strain, and it is a unique opportunity for employees to gain new perspectives on their organization and its leadership. The actions you take can help reinforce your employees’ trust in the organization and improve their performance at a difficult time.  It can also help create a better culture that will carry on when the crisis is over.

How you react in the face of crisis and uncertainty can strengthen your business for years to come, so seize the opportunity.

December 10, 2020

The QBI Deduction Basics and a Year-End Tax Tip That Might Help You Qualify

The QBI Deduction Basics and a Year-End Tax Tip That Might Help You Qualify
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If you own a business, you may wonder if you’re eligible to take the qualified business income (QBI) deduction. Sometimes this is referred to as the pass-through deduction or the Section 199A deduction.

The QBI deduction:

  • Is available to owners of sole proprietorships, single-member limited liability companies (LLCs), partnerships, and S corporations, as well as trusts and estates.
  • Is intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate.
  • Is taken “below the line.” In other words, it reduces your taxable income but not your adjusted gross income.
  • Is available regardless of whether you itemize deductions or take the standard deduction.

Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For 2020, if taxable income exceeds $163,300 for single taxpayers, or $326,600 for a married couple filing jointly, the QBI deduction may be limited based on different scenarios. These include whether the taxpayer is engaged in a service-type of trade or business (such as law, accounting, health, or consulting), the amount of W-2 wages paid by the trade or business, and/or the unadjusted basis of qualified property (such as machinery and equipment) held by the trade or business.

The limitations are phased in. For example, the phase-in for 2020 applies to single filers with taxable income between $163,300 and $213,300 and joint filers with taxable income between $326,600 and $426,600.

For tax years beginning in 2021, the inflation-adjusted threshold amounts will be $164,900 for single taxpayers and $329,800 for married couples filing jointly.

Year-end planning tip

Some taxpayers may be able to achieve significant savings with respect to this deduction, by deferring income or accelerating deductions at year-end so that they come under the dollar thresholds (or be subject to a smaller phaseout of the deduction) for 2020. Depending on your business model, you also may be able to increase the deduction by increasing W-2 wages before year end. The rules are quite complex, so contact us with questions and consult with us before taking steps.

December 07, 2020

Year-End SWOT Analysis Can Uncover Risks

Year-End SWOT Analysis Can Uncover Risks
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As your company plans for the coming year, management should assess your strengths, weaknesses, opportunities and threats. A SWOT analysis identifies what you’re doing right (and wrong) and what outside forces could impact performance in a positive (or negative) manner. A current assessment may be particularly insightful, because market conditions have changed significantly during the year — and some changes may be permanent.

Inventorying strengths and weaknesses

Start your analysis by identifying internal strengths and weaknesses keeping in mind the customer’s perspective. Strengths represent potential areas for boosting revenues and building value, including core competencies and competitive advantages. Examples might include a strong brand or an exceptional sales team.

It’s important to unearth the source of each strength. When strengths are largely tied to people, rather than the business itself, consider what might happen if a key person suddenly left the business. To offset key person risks, consider purchasing life insurance policies on key people, initiating noncompete agreements and implementing a formal succession plan.

Alternatively, weaknesses represent potential risks and should be minimized or eliminated. They might include low employee morale, weak internal controls, unreliable quality or a location with poor accessibility. Often weaknesses are evaluated relative to the company’s competitors.

Anticipating opportunities and threats

The next part of a SWOT analysis looks externally at what’s happening in the industry, economy and regulatory environment. Opportunities are favorable external conditions that could increase revenues and value if the company acts on them before its competitors do.

Threats are unfavorable conditions that might prevent your company from achieving its goals. They might come from the economy, technological changes, competition and government regulations, including COVID-19-related operating restrictions. The idea is to watch for and minimize existing and potential threats.

Think like an auditor

During a financial statement audit, your accountant conducts a risk assessment. That assessment can provide a meaningful starting point for your SWOT analysis. Contact us for more information.