One thing that is important to do at the end of the year is to close your books. That’s why we put together a check-list of the most common accounting to-dos for the year-end.
Profit and Loss Statement Review
The first thing you should do before and after this checklist is review your profit and loss statement. It gives you a picture of how you’re spending your money and will show if your expenses are categorized correctly.
Review your P&L again after you reconcile your bank accounts, receipts, and other potential concerns.
Did you use vendors this year For every vendor you’ve spent $600 or more for services, you’re required by law to issue and complete a 1099 form. The 1099 must be filled out and sent to the IRS by January 31st.
Gather and organize your receipts
As we mentioned in our prior checklist, it’s important to gather and organize your receipts. A shoebox of receipts is not a organization system.
Gather copies of invoices for assets you purchased so your tax professional has the information needed for depreciation.
Be sure to copy your thermal receipts because they have a tendency to fade.
If you use your car for business, write down your odometer reading.
Reconcile your bank accounts and credit cards
For the year-end, it’s important to make sure what you have in your financial statements matches up with your bank and credit card accounts and your year-end statements. If you are using online accounting software, it’s important your ledger balance matches as well.
Check your payroll
Make sure you are withholding taxes for fringe benefits, deferred compensation, and end-of-year bonuses.
Accounts receivables and invoices
There’s a tendency to forget to collect on your invoices if you don’t have a good system or don’t use invoicing software.
Take physical inventory
Depending on your type of business you may or may not need to take physical inventory. If you do, you’ll want to match it with your end of year balance sheet. It’ll also want to know how much you’ve spent on inventory throughout the year and its current value.
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