Having a year end accounting checklist and closing procedures is critical to the long term success of your business. It's important to start the new year with a fresh, clean slate that is correct and organized, so you’ll be poised for success. Whether you have an accountant on staff or use the expertise of an outsourced accountant, make sure to include the following seven essential items on your year end accounting checklist.
Whether you’re a small business looking for alternative tax planning strategies or a contractor with loads of receipts in the glove box, the first step on any year end accounting checklist is to get your books in order. As a matter of fact, you’ll have to go through this step prior to doing anything else.
So, make sure to get the help you need. There are several ways to find a reliable and experienced accountant. And when you partner with an accounting firm, make sure to ask about the steps you can proactively take to make the next year a breeze.
One of the most vital items on any year end accounting checklist is reconciliation. This should entail ensuring your bank accounts line up to your company's year-end bank statements. All of this information is critical in identifying any losses and profits.
This information will also allow you to make sure all monies are accounted for your bank accounts. Another type of reconciliation is to ensure all employee holdings are effectively accounted for and has been properly deposited with state and federal governments.
It’s vital your year-end payroll expenses and your monthly pay roll expenses matchup. In order to complete the annual IRS Form 940 and reconcile your total annual expenses, you’ll need to confirm the numbers are in line.
At the same time, your profit/loss statements should be reviewed to make sure everything is correctly categorized. If you have doubts about your payroll taxes or if categorizing everything troubles you, you may want to enlist the services of an experienced accounting professional to review your numbers and help you close out your books.
Did you make any significant purchases of fixed assets during the year? If so, you may be eligible for Section 179 tax deduction. In either case, all of your large capital expenditures should be recorded properly on your balance sheet.
You should check and confirm your inventory of fixed assets as well as record of sales, depreciation, or disposal. Since using an effective depreciation schedule can be very complicated and overwhelming, many business owners choose to hire an experienced accountant or back office expert to manage this task.
In addition to large fixed assets, you should correctly note all assets are properly listed in your accounting ledger. It's important to make sure you still own these assets and they're accurately valued. Further, the value of the assets should include any type of depreciation that has occurred over the year.
If you have sold any assets, profits should be represented and the assets must be removed from the books. If the assets experienced any depreciation prior to the sale, it should be accurately reflected in the books as well.
Inventory is critical to any business that sells items and keeps them on stock. Not enough inventory can cause a corporation to miss out on possible sales, while too much inventory can result in excessive debt.
Your inventory should be listed with it's appropriate value, which is the sale value. You should mark your inventory up to the market value, so it's marked up for sale.
One of the last items on your year end accounting checklist should be your business debts. Debts will help create a clear and most accurate picture of your business's end-of-the-year net value.
All debts should be identified on the ledger. In addition, if the debts have been forgiven, they should be written off in the ledger. You should also notate the current standing value of the debts.
The end of the year is an extremely busy time for all businesses. Managers and business owners are often left scrambling to gather all of the required documents in an attempt to prepare taxes and make the necessary filings.
Since many of these filings are only required once a year, most business owners lack the experience and understanding to complete them in a timely and efficient manner. Fortunately, you don't have to do it alone. The experts at John F. Dennehy Jr. CPA, PC are here to help.
We offer decades of experience helping business owners plan and file the necessary documents. Instead of trying to do it on your own, trust the experts at John F. Dennehy Jr. CPA, P.C. to provide assistance and guidance, so you can focus on growing and running your business.
Contact John F. Dennehy Jr. CPA, PC today for assistance with your year end accounting checklist.