Tidy Up: Getting Ready for Your Accounting Year End
While you’re wrapping up everything else in December, don’t forget about your finances.
It’s almost time to break out the new year’s calendar. Everyone in your company is probably scrambling, trying to complete every task and project that needs to be done before the end of December.
But there are things you can do during December that will both let you exit cleanly and be ready for the questions that will come in January.
1 – Get your staff involved.
If you have multiple people working on your company, tell them as soon as possible that you’re trying to round up and complete everything that needs to be entered, sent, or otherwise addressed before the end of the year.
2 – Use the tools provided by your cloud-based accounting solution.
If you’re not yet doing your accounting using an online application, you should seriously consider it. If you are using one, you know how much it helps you keep up on your daily bookkeeping tasks, with its comprehensive customer and vendor profiles, pre-built transaction forms that can be easily completed and emailed, its payroll-processing capabilities, and its reports.
The latter is especially useful this time of year: With a few clicks, you can see your company’s financial data displayed telling you things like your current profit or loss, late payors, invoices and amounts due, and inventory levels.
If you’re confident you can handle accounting on your own, explore Wave software. With Wave, the small business accounting and invoicing software, you can easily manage your small business’ finances online.
3 – Prepare to close your books if your fiscal year ends December 31.
Depending on the size of your business and its financial requirements, you may or may not officially close your books. If you’re unsure what this would mean for you or you don’t know whether you should, talk to a financial advisor.
4 – Remember to close the year with your customers.
You should have some kind of contact with your customers in December. Depending on the size of your list, you still have time to order printed cards or write notes by hand or make phone calls. You want to:
- Thank them for their patronage over the year, and let them know that you look forward to being in touch/meeting their needs/providing solutions to problems the next year.
- Deal with any outstanding balances and/or sales transactions. No one likes getting a collection letter as they head out to a holiday party, but it’s fair to ask if they’ll help you close out your year in preparation for a new one.
- Offer them a discount or a shipping upgrade if you have inventory you’d like to sell before January.
5 – Talk to a tax advisor about your tax obligation.
Ideally, you should be working with a tax advisor year-round on tax planning. When you have income taxes in mind every month of the year, you can make smart spending decisions that will benefit you. It also may be that you’ll want to defer some income to the next year to lower your tax bill.
If you are able to run some basic income-and-expense reports – and this is where cloud-based accounting comes in handy – an accounting professional may be able to suggest some actions you can take prior to the end of the year. He or she can also create and analyze that standard financial reports that need to be run periodically.
6 – Clean up your financial files.
Now’s a good time to go through your customer, vendor, and item records – whether they’re on paper or in an accounting application – and determine whether anything should be jettisoned. Talk to your financial advisor before you do this. Some records and transaction forms may need to be saved and/or archived.
7 – Make plans for the next year.
In terms of your accounting policies and procedures, what’s working and what’s not? If you haven’t already, take this opportunity to clean up any workflow issues so you can start fresh in January. A new year often brings renewed energy and motivation, so be ready to capitalize on that.
Hopefully the above tips gave you strategies for your accounting year end. Want help? Get back to what you love and let a small business certified tax pro help you with your small business taxes, bookkeeping, and payroll. Learn more at blockadvisors.com.