Happy New Year! It’s that time of year when we find ourselves living in the past and the present and potentially the future. It is just the beginning of the New Year, yet we are thinking about what happened in the past year. Until we see and put together what has past, we remain stuck in different time mindsets all at the same time. Getting through this process and time period is always challenging, but we have put together 8 of the most important accounting to-dos for completing the year end and allow you to move forward successfully into the New Year.
- Review your Profit and Loss Statement
Reviewing your Profit and Loss will allow you to see how you have been spending your money and to see that your expenses are properly categorized. Preparing a comparative Profit and Loss statement to the prior year, will also help identify variances in income and expense lines that may require a more detailed review to ensure that there are not duplicate items recorded or missing items that may not have been captured. The Profit and Loss statement that is sent to your tax CPA will be used to prepare your returns so you want to make sure this is correct to ensure that taxes are not under or over paid to the government. Make sure you know whether your tax accountant is using cash or accrual basis reporting for preparing your returns and make sure the information you are going to provide them is the same.
- Collect W-9s
Review your vendor list. For every vendor you have spent $600 or more for services, you will need to review if you are required to prepare and issue a completed 1099 form. The 1099 form must be filled out and sent to the IRS by January 31st. If you don’t have on file already, you will need to collect the information needed by asking the vendor to complete a W-9 form.
- Reconcile your bank and credit card accounts
Reconciling your accounts, makes sure your financial statements for year-end match up with the information on these statements. It is typical if audited by the IRS for them to ask for these statements so make sure these are correct and in agreement.
- Reconcile Payroll and related expenses
A reconciliation of your quarterly payroll tax returns should be done to agree with the expenses recorded on your Profit and Loss statements for year end. Make sure payroll taxes, fringe benefits, deferred compensation, and end of year bonuses have been properly reported.
- Review Accounts Receivable Aging and Invoicing
It is important at this time of year to review what is still owed to you and make sure that it is correct. Are there outstanding invoices that you will never collect on and should be written off or by following up you will receive monies owed? Also, make sure you have invoiced for all services provided or products sold.
Cash flow is typically tight at the beginning of the year so doing this now may allow you to collect additional monies.
- Physical Inventory Count
Taking a physical inventory count, if needed for your business, will allow you to match to reporting on your year-end financial statements. It will allow you to see what you have spent on inventory and its current value, identifying any inventory that not able to be used or sold and should be written off, as well as shrinkage.
- Fixed Asset review
Create a list of office equipment, computers, and office furniture you use in your business. Are there any broken items that need to be thrown out or repaired? If you lease copiers or other equipment, review the contracts and make sure the accounting is correct. Review the list to see that you are recording depreciation expense where appropriate.
- Estimated tax payments
Review with your tax accountant where you are with the estimated tax payments you have made to date and what you should pay in for your final payment due in January. Doing this before the tax season is in full swing will allow you both to be in sync and make the final filing of your return easier and minimize surprises.
Out with the old and in with the new by completing these year-end tasks. As you begin to look forward, you will be in a position to plan and make any needed changes or adjustments for business success. Wishing you all a successful and prosperous New Year!