The end of the year is a busy time for business owners and accountants. The last few months are typically when most companies have their busiest workloads, which means making sure your books are in tip-top shape before you pop the bubbly and wrap up operations for another year. Here are some high-level tasks to consider as you prepare for your next tax season.
Year-End Bookkeeping Tasks
Clean Up Your General Ledger
If you’re using QuickBooks, there’s a tool to help you in this process. You can use Reconcile Transactions to clean up the general ledger.
The reconciliation feature lets you see how all your transactions and balances match up with your bank statements, credit card statements, and invoices from vendors. This helps you find errors before they become too difficult to correct down the road!
Wrap-Up Incomplete Bank Deposits
Now is the time if you’ve been meaning to get caught up on outstanding payables. You can use online banking or a mobile app to review outstanding invoices and make payments. If you’re using accounting software like QuickBooks, there may be a feature within it that lets you generate reports by the customer so that it’s easy to figure out what needs payment.
If you haven’t already received all of this year’s receivables from customers who owe money for services or products, now is also the time to reach out and remind them of their outstanding bills. If some customers are slow on paying, do what it takes—be nice about it!—to ensure that everyone gets paid before year-end close out.
Get Caught Up On Outstanding Payables
As you close out your books, get caught up on accounts over 90 days old. This is especially crucial if you have a lot of accounts that are past due and haven’t been paid off yet. If any invoices or bills have been sitting in your inbox for more than three months, it’s time to pay them off so that they don’t become delinquent in the new year.
Review Your Financial Statements
One of the first things you should do is review your financial statements for the year. These include:
The cash flow statement shows how money came in and went out. This can help you make better decisions about future investments since it will indicate when you’re doing well (or not) and by how much.
The balance sheet shows assets such as cash on hand and property owned compared to liabilities like loans from banks or other financial institutions. It also includes things like inventory (the goods a company has stored). The balance sheet provides an overview of the health of a business by showing how much money it makes versus how much it owes its creditors—plus what assets are left over after all that’s been paid off.
The income statement summarizes total revenue minus expenses over time; this shows whether a business made money during any given period of time measured on this statement—taking into account any discounts offered or special offers made during those periods too! This information helps predict what will happen in future quarters based on past performance so that owners know how profitable their enterprises may be at certain times.
Adjust Tax Liability Allocation
The tax liability allocation is the process of assigning your total tax liability to the periods in which it should be recognized. The difference between tax liability and payable is that the former refers only to an estimate of what you will owe, whereas payable means you’ve actually paid it.
This year-end task also involves adjusting your reserves for bad debts and adjusting inventory for warranty repair costs and obsolete inventory.
Prepare Annual Reports
An annual report is a summary of the financial position of your business. It’s a great way to review and share your business’s accomplishments over the past year and set goals for next year.
Your accountant can help you prepare an annual report if you prefer to keep it simple or use online tools like Benchmark for easy-to-use templates and automatic data entry.
You’ll need to include basic information about your business, including:
- Business name
- The date the report was prepared (usually December 31)
- The location of operations (city or region)
Bottom Line
Hopefully, this post has helped you better understand the year-end bookkeeping tasks that small businesses should be completing. You can save time by automating your processes or outsourcing them in several areas. Still, business owners need to stay on top of their finances, so they don’t fall behind during busy times like these.
Running a small business is hard, so don’t make things more difficult by falling behind on bookkeeping. At Kurv Business, we make it possible for you to hire expert bookkeepers at a price you feel good about. Learn more about us here.