7 Tips to Get Your Business Through Year-End
The last few months of the year are a great time to start thinking about the end of the year and the beginning of the new year. Some big picture questions I ponder around this time are:
What have I accomplished this year?
What could I have done better?
What changes can I make for the upcoming year?
While considering these questions, it’s also important to start reviewing and tidying up your bookkeeping before handing the data to a Tax Preparer. If you’re ahead of the game and getting year-end tackled early, you’ll not only be able to file your taxes on time, but it will be a much smoother process—No last minute panic or stress!
Without the right preparation, many important details can be overlooked. One example I commonly see is businesses waiting until mid-January to collect W-9s. The success rate of getting those W-9s back is much less around the deadline to file 1099s.
So, when is the best time to get a W-9 from your vendor? Before you pay them, always.
The following six areas will provide you with a general idea of items that need to be reviewed by December 31st. In addition to checking these off your list, be sure you have all documents and information requested by your Bookkeeper and/or Tax Preparer.
- Run a vendor profile check. Check that all vendors you’ve paid $600 or more to throughout the year have a completed and signed W-9 on file. With 1099s around the corner and due January 31st, you don’t want to scramble to collect these. To make it easy, you can collect them electronically by using a service, such as Track1099.com.
- Reconcile accounts. Verify that all transactions posted to your bank and credit card accounts are accurate by reconciling. If the ending bank balance on the books does not match your bank statement’s ending balance, investigate and fix any errors.
- Receivables. If you have outstanding invoices sitting on the books, start following up with your customers to see what may be delaying payment. Additionally, you’ll want to take this time to catch up on your own invoicing. Have you billed for every product and service offered to date?
- Payables. Check your Accounts Payable data. Are there any bills outstanding? Any payments that weren’t entered? For example, if you’ve paid some expenses personally, were they captured in your business? Also, make any remaining deductible purchases or investments you’ve been meaning to take care of before January 1st.
- Take a physical inventory count. If you have inventory, do not miss this step! Prepare for and take a physical count of inventory on hand as of December 31st. You’ll also need to have your inventory balance as of the beginning of the current year, the total amount of inventory purchased throughout the year, and the total amount of inventory sold throughout the year.
- Review the Profit and Loss along with the Balance Sheet. Review your Year-to-Date Profit and Loss as well as the Balance Sheet. Does anything look off? Do revenue, Cost of Goods Sold, and operational expenses make sense? Are payroll taxes correctly entered—do the numbers match the quarterly 941s filed? Are asset, liability, and equity balances accurately reflected? These are just some of the things that need to be thoroughly reviewed.
- Start working with a Bookkeeper and/or an Accountant before the busy season. If you don’t have the time to start preparing early, then it’s definitely worth hiring this project out. “Busy season” for Bookkeepers and Accountants can start as early as September and continue on through May. Reach out to both as early as possible to ensure you’re able to meet all required deadlines!
As a Bookkeeper, I find that many of the calls I receive toward the end of the year are from panicked business owners. Generally, the longer people wait to gather and review information for their accounting records, the more expensive and time-consuming it is to fix.
If you’re at all in doubt or overwhelmed, call in help as early as possible—this is not only the more affordable option but will set things up for success much sooner! Reach out to me to schedule your free discovery call and let’s get you prepared to file your taxes on time!
For more tips, visit QuickBooks’ Resource Center.