Getting Ready for Year End

Posted On October 31, 2018 / Under , / With

Year-end is a busy time and can pass by like a whirlwind. Especially if your fiscal year follows the calendar year, accounting and tax deadlines can easily become swept up in the stress of projects and holidays. The best thing you can do is plan ahead and prepare early. Business may stay in motion through December 31st, but that doesn’t mean you can’t start getting ready now. Here’s a list of items to review.

Are there any holes in your bookkeeping records?

Have all your transactions been recorded? You’ll want to make sure you’ve captured all company receipts and payments. Ideally transactions are recorded daily as they occur, but even that doesn’t guarantee that items haven’t been overlooked. This is a good time to do review your bank transactions and do a bank reconciliation. Make sure to look out for any unexpected items such as returned checks, bank fees, or automatic payments.

Don’t forget your credit card transactions! They also need to be recorded to properly report your company’s expenses.

Do your financial reports agree with your account statements?

As we’ve already mentioned, you’ll need to reconcile your accounts to ensure that your financial reports reflect the reality of your business. Compare your bank and credit card statements to your balance sheet. The balances of the appropriate ledger accounts should match your statements. If they don’t, you’ll need to be able to explain why. You won’t want to wait until December 31st to investigate discrepancies.

You’ll also need to reconcile any other liability accounts on your balance sheet. If you have any loans, for example, you’ll want to make sure the financial reports agree with your documentation. Usually you’ll need to record adjustments for interest.

Are you waiting on outstanding accounts receivables and payables?

Review your payables and receivables, especially items 60 days or older. Are the payables truly still due? Can you support the balances with current invoices? If you’re missing any, you’ll want to contact your vendors. Ideally, you’ll want to pay off what you can by the close of the year.

This is also a good time to follow up about any checks you’ve issued that are still outstanding. Contact your vendor to confirm they’ve received your payment. Consider voiding and re-issuing as necessary.

Regarding aged customer receivables, are these still collectable? Just like payables, make sure you have support documentation for what’s owed. Contact your customers about old items so that you can collect payment before year end.

Do you have the required back-up to support your records?

We’ve alluded to this already, but make sure you have documentation to support your books. Every transaction should have its back-up: deposits, receipts, invoices, and statements. Just as important, make sure they’re organized and accessible. It’s no good having a receipt if you can’t find it when you need it.

Is payroll ready for year-end?

As you face the end of the year, there are a few payroll items to consider. First, you’ll want to make sure all taxable income is reported. This includes any taxable fringe benefits, such as personal use of company car.

You’ll also want to make sure you’ve received all expense reports from your employees so that reimbursements can be made within the proper timeline.

Are you going to be paying any annual or holiday bonuses this year? Even if you give a cash bonus, it’s taxable income, so be sure to report it through payroll.

Secondly, review your employee records. Is all payroll information accurate? Are their addresses up-to-date? You won’t want to do a last-minute scramble when preparing your employees’ W-2s.

Have you hired any independent contractors this year? If so, make sure you have a W-9 on file. This includes any vendors to whom you’ve paid over $600. You’ll be required to provide them with form 1099. This isn’t due to the IRS until the end of January, but it’s not always easy to get these forms back quickly. It’s never too soon to ask.

In Conclusion

Many of the items on this list should already be part of your practice throughout the year, but extra diligence at the end of the year can save a lot of time and trouble come January 1st. Here at IAAB, we perform these tasks regularly as part of our services. If you find yourself falling behind, consider contacting us.

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