It’s that time of year again for CEOs to build an end of the year to-do list and ask themselves tough questions and answer them honestly. Will the old strategies work next year?
The End of the Year To-Do List
Here are some things every CEO should accomplish before the end of the year:
Give stock to staff you wish to keep.
Stock options are essential for startups and growth-stage organizations to attract and retain top people. Due to the high cost of early recruits, it is difficult to hire above them without increasing your equity pool. This may result in a group of well-paid workers who aren’t all working out. Giving important personnel options or restricted shares with vesting conditions might motivate and engage them.
While there are certain tax considerations, if your approach is well-designed and articulated, your workers will profit as your business expands. Consider offering Incentive Stock Options (ISOs) to workers if your company’s worth is low enough. ISOs may be sold or exercised without triggering payroll taxes (subject to capital gains rates rather than ordinary income rates). Fewer shares equal more after-tax money for your workers. This might be a robust approach to raise employee equity pay without eroding your core funds.
Remember that you have alternatives. You don’t have to give top achievers additional equity to balance your books. Instead, promise to make more cash-focused proposals next year. Even vesting times are not uniform.
- Make your equity strategies unique and strategic.
- The procedure should get clearer with time, which shows your organization is expanding.
Give your staff some assurance (and your accounting team some homework) by sending out a survey to gauge employee satisfaction with their remote work options.
Next, and maybe most significantly, consider the tax ramifications of working remotely. Remote work may attract top talent, but it may also increase your tax costs. When hiring, even companies that don’t pay corporate income tax should consider state and local payroll, property, gross receipts, and sales taxes. Hiring a remote worker provides a taxable presence in a state or city.
Know your tax expenses for cash flows and your finance team’s administrative charges.
How might a single 90210 employee alter your present structure?
Work with an expert to create hiring criteria for the next year to avoid any tax surprises. For example, state tax boards are beginning to prioritize employee housing and employment over corporate headquarters. As a consequence, your firm may be taxed in places where you do not conduct business.
Remote workers give flexibility and broaden the recruitment net, but they also add to tax-filing responsibilities. Understanding these regulations may help you avoid fines and tax concerns.
Boost Your Security
Boost your cyber-security by two degrees. As your systems get safer, hostile actors become more subtle. And it’s expanding fast. Cyber assaults will increase significantly in 2022. In February 2021 alone, nearly 2.3 billion gigabytes of data were compromised globally. Some applications stayed down for days, weeks, or even months. The number of cybersecurity events for the year has already surpassed those for 2020 by almost 17%. From $3.86 million in 2020, the average cost of major data breaches has risen to $4.24 million in 2019.
- When was the last time you completed a cyber security assessment?
- Do you know where our network has security flaws?
A secure environment is more than just restricting access to your network and ERP system as your company grows. Now is the moment to assess your network’s risk.
According to Asael Meir, CohnReznick Partner and National Technology Practice Leader, Cybersecurity risk reduction is a process of developing a cultural mindset of evaluation and monitoring.
Consider lowering the admission threshold by two degrees by the end of the year. Also consider switching from an authorization-clearance approach to one that can avoid harm from blatant theft. It’s not just about keeping bad actors out; it’s about making their tools useless. Finding cybersecurity flaws in your firm may be difficult, if not impossible, without educated IT personnel. Hackers have gotten more adept, and remote personnel may not be secure, adds Meir. Leaders should be aware of this. This is why having a third party analyze your cybersecurity plan may be quite beneficial.
This might also help you build a strategy for recognizing risks and responding to breaches.
A Smart CEO Diversifies
Think about diversifying your advisory board and management team. Creating a diverse workplace culture that attracts and keeps talent takes time.
In reality, many teams claim that as they develop, they become more homogeneous, making it tougher to increase their diversity. Consider your advisory board and executive team’s diversity before the year ends. A good CEO always keeps this in mind. Specifically, IT organizations should assess their employment practices outside of their home bases.
Working remotely allows you to hire people from all across the country, says consultant Tim Roberts.
These are a few things for CEOs to consider when building their end of the year to-do list.