A critical time for all manner of businesses, year-end is the ideal opportunity for getting your financial records organized.
With accurate and organized records, not only can you avoid costly errors during tax season, but you can also give your business a solid financial footing for the approaching new year.
Whether you do it yourself, or with expert guidance from professionals in tax planning in Coral Gables, here are a few simple steps to help you achieve clean books with confidence, as the end of the year nears:
Reconcile your accounts
This is the first, and arguably most crucial step when tackling year-end bookkeeping, and ensures that actual cashflow and account balances, are properly reflected in your financial records.
Look at your bank, credit card and loan statements in detail, to check that every entry is recorded and there are no duplicate entries. If there are, take action to resolve them as soon as possible.
Review all transactions and categorize them
Check back through every transaction involving income and expenses to make sure that they’re all categorized properly. Look out for personal and business transactions that might be mixed up, inconsistencies in categorization and any expenses that haven’t been categorized.
Any transactions that are misclassified can cause errors to appear in your tax filings and financial reports.
Make updates to accounts receivable and payable
Make sure that all pending invoices have been sent, outstanding payments have been received, and all bills have been paid in full.
For accounts receivable, you must follow up on any invoices that are outstanding, so that you can give a boost to cashflow year-end.
For accounts payable, all bills that haven’t yet been paid must be recorded so that you can achieve a clear picture of all liabilities.
Review depreciation and any fixed assets
All purchases, depreciation and disposals must be accounted for, and to achieve this, you should update your fixed assets register. Helping you calculate depreciation accurately and better prepare financial statements, having fixed asset records that are accurate, is essential.
Make sure that all major purchases of property and equipment have been properly recorded, and that the year’s depreciation has been calculated.
Check payroll records
Mistakes in payroll can cost a company dearly, so reviewing your payroll records is vital. Check that all wages, benefits and tax withholdings for employees are accurate, that your general ledger is reconciled with payroll reports, and that all taxes for payroll have been filed and paid.
Get your tax documents organized
Below are the most important documents for tax purposes that you should gather together:
- 1099 forms (for contractors)
- Receipts and invoices
- Documentation for deductions like office supplies and travel
- W-2 forms (for employees)
With these documents at the ready, tax filing is made smoother.
Analyse your financial statements
Year-end is a great time for assessing the overall financial health of your business, and with help from a tax preparation service in Miami, you can interpret key reports, such as balance sheet, profit and loss statement, cashflow statement, and make plans for growth in the coming year.
Close and back-up books
Once all of the steps above have been completed, you can close out your books for the year by reviewing all entries one last time, locking the period in your accounting review, and backing up your data.
By following these simple steps, and cleaning your books up before the end of the year, you can save yourself a lot of stress, make life easier for your tax accountant, and head into a new year on a solid financial footing.