It’s crucial to ensure that your books are accurate and up to date before closing them at the end of the year. At Barta Business Group, a small business bookkeeping and accounting firm in Denver, CO, one of our main tasks is to perform annual reviews on our clients to ensure that they know where they stand financially and what they can do to improve. Here is a list of general accounting and bookkeeping duties that are applicable to practically any organization. Accounting and bookkeeping tasks vary among industries and businesses.
- Keep track of and classify all of your earnings and outgoings.
It can be simple to let a month go by without keeping track of your earnings and outlays, but at the end of the year, all of your records must be updated. Make sure to keep your personal and business costs separate. For instance, if you work from home, you may be able to deduct a portion of your rent and utilities as a business expenditure.
- Reconcile your credit cards, loans, lines of credit, bank accounts, etc.
Check to see if your statements line up with your accounting records. You should conduct some research if there are any errors, missing transactions, or questionable activities. Inaccurate records can cause you to pay income tax that is either too much or too little.
- Conduct accounts payable and receivable aging reports.
Verify if there are any unpaid balances for payables and receivables. Create invoices and send them out for any work you haven’t yet billed a client for. Send reminders for invoice payments if you still have any outstanding balances. Check that all of your bills and expenses have been paid and recorded, and for accuracy, compare vendor statements with your own records.
- Eliminate bad debts
Sadly, not everyone pays their payments on time. If an invoice is not paid, it must be written off or given to a collection agency.
- Check employee payroll information and records.
It’s time to be ready to file W-2s and W-3s if you have a payroll. Verify that each employee’s mailing address is up to date. If you are using a payroll service, any addresses need to be verified and updated before December 31.
- Establish whether vendors or individual contractors are 1099 eligible
Contractors or vendors that received $600 or more in annual payments are eligible for 1099s and require a tax ID. You shouldn’t put off filing a 1099 because the due date is January 31.
If you have a bookkeeper or accountant, ask them for assistance if you have any questions regarding this procedure.
- Refresh the stock
If you sell tangible goods, do a physical inventory. Check your count against the information on your financial statements. Investigate any discrepancies and make the necessary changes to your books to reflect the accurate inventory.
- Refresh fixed resources
Any new fixed assets purchased this year must have supporting paperwork that includes a description, the purchase date, and the purchase price. If a fixed asset was sold, or taken out of service, this needs to be noted and information passed on to your tax accountant.
- Prepare balance sheet and profit & loss reports.
Prepare a balance sheet and a profit and loss (income statement) for the entire year. You’ll need these reports to present your income and expenses to an accountant when you meet with them at the end of the year. Seek professional bookkeeping guidance if you are uncertain about the process.
- Schedule a year-end tax review with a CPA.
Now that your books are in order, it’s time to schedule a consultation with a CPA. Small business owners should meet with a CPA at the end of the year to acquire an estimate of their tax liability and make any necessary year-end adjustments. By doing this, you’ll be able to avoid fines and receive adequate warning before having to make a tax payment.
Before you meet with a CPA, we want to emphasize how important it is to have your books current and accurate. Both you and the accountant will benefit from the time savings. If you don’t, having a bookkeeper put your reports together at the last minute can be very expensive.
About Barta Business Group
Most businesses are great at their craft, but not great at the financial back of the house. At Barta Business Group in Denver, CO Our team of bookkeeping, accounting, and finance professionals guides business owners in making better decisions, so they can focus on doing what they love in their business. We understand the peace of mind that comes from knowing your financial information is done right every time. We value being able to support businesses in turning financial data into actionable insights, so you may plot a course for your company’s future with confidence.