Now that the year is coming to an end we need to ensure we are ready for taxes.

Keeping your accounting records up to date all year long is essential for any business so you can see exactly where your business stands and be able to make thoughtful decisions based on clean numbers. 

At year-end, there are a few extra accounting tasks to finish so that your books are ready for the tax professional when tax time comes around. Plus, anything that wasn’t performed monthly or more often should now be completed at year-end. 

Here’s our list of items of items to provide to ensure we are ready. Every company may not need to do every task – just the ones that apply to their business and their situation.

1. PayPal Reconciliation

 It’s easy to forget your PayPal account in the list of reconciliations to complete. It is effectively another cash account like your bank, and we list it here separately for emphasis.  If you’re using your PayPal account for both business and personal, get two accounts and your accounting will be less expensive and more straightforward.

2. Credit Card Reconciliation

If you are using your credit card for both personal and business. Please provide them so we can book your business expense portions.

3. Loan Reconciliation

If your company has any new loans, the loan balance on your balance sheet should match the loan balance on the bank or lender statement. Please remember to provide us with the yearend statement. When payments are made, they include both principal and interest which need to go into separate accounts.  Often, this is not recorded correctly and can be corrected at year end.

4. Uncollectible Invoices

If any of the unpaid invoices in your Accounts Receivable account are old and might not be collectible, they can be written off or sent to a collection agency.

5. Inventory

If your business stores inventory or items for sale, then the cost of these items need to be reflected on your balance sheet. The reconciliation is a counting of physical inventory and matching that to the inventory balance on your books. Please remember to provide your year end inventory valuation.

6. Accounts Payable

If you owe vendors money for work performed or items acquired, then you will have a balance in Accounts Payable. The total of this account should add up to all of the unpaid bills you have.

You may need to adjust the balance for accuracy. For example, some bills may need to be voided or adjusted if the amount is incorrect.

7. Meals and Entertainment

One of many things your tax accountant will be asking you for is the amount you spent on meals and entertainment.  Have you forgotten to provide any that were paid with personal funds? 

8. Documentation for Invoices, Bills, and Receipts

If you are ever audited, you’ll need proof of what you spent in your business. Year-end is a good time to make sure your paperwork is in order and either filed in a safe place or scanned in and saved in the cloud. Remember we keep these when provided in your Dropbox and or Liscio also in most cases right inside QuickBooks.

9. Fixed Assets

Your balance sheet should reflect the long-term assets your company owns, such as vehicles, buildings, land, machinery, furniture, equipment, computers, and the like. Each of these items should be listed on your fixed assets schedule and the balance should reflect the correct value of these items.

10. Depreciation

Certain fixed assets can be depreciated which means a portion of the cost is expensed each year. A company should have a current depreciation schedule and that should be updated each year or more often.

An adjusting entry will be made to reflect depreciation for the current year or period if it’s recorded more often.

11. Wages Reconciliation

If you have payroll with Noh Hassle Bookkeeping, we have all of your 4 quarter returns and these numbers will be matched back to your financials.  We will also generate your w2’s

12. Bonuses

If you award bonuses at year-end, ‘tis the season to run that special payroll cycle.

13. W-4s

Year-end is a good time to see if you have copies of W-4s in hand from your employees. We want to ensure we have current ones for the upcoming year.

14. Vacation and PTO

If your company does not roll over vacation time for employees, there may be an adjustment to make in your payroll system to update the earned and unused hours.

This might need to be done on the employee’s anniversary date versus year-end.

15. State Unemployment Insurance Rate

At the beginning of each year, each unemployment insurance agency in the states where you have employees working will notify you of your company’s new SUI rates. Please provide those to us as soon as possible.

16. Workers Compensation Insurance Updates

Your workers compensation policy should always be kept up to date with new hires, new or changed work codes, employee terminations, and work location changes, but year-end provides a good time to double-check it. This year, your employees may very well be working from a new location, so be sure to update your policy if you have not already.

17. Posters

If you have workers in a state that is a stickler for labor law posters, then make sure you send up-to-date posters to each work location in your business and instruct employees to display the employment posters prominently. If you are a virtual office we can provide them to show up in their employee portal

18. W-9s

If you pay contractors, each one will need to furnish you with their W-9. It is best to collect this before you issue the first check to them. But year-end is a good time to audit your records to see if you have what you need. Remember we always have to chase these down at year-end and it is frustrating not just for you but for us as well.

You may also want to collect their insurance certificates at this time. If you do not have them, you may be subject to paying more in workers compensation.

19. 1099s

Your company may need to generate and send 1099s to any contractor you paid over $600 for the year that was not paid through credit cards or a payment vendor like PayPal. We will generate these for you.

20. Other Account Balances

If you have other accounts not listed above on your balance sheet, they should be reviewed or reconciled. These accounts are less common: goodwill and other intangible assets, deposits, prepayments, escrow, and others.

It will depend on the nature of the account as to how the amount can be validated.

21. Other Accruals

There may be other accrual entries not mentioned here that apply to your situation and that need to be made by your accountant.

22. Barter Transactions

If you performed any barter agreements this year, We will need to make a manual journal entry to properly record the transaction.

23. Other Adjustments and General Cleanup

We try to keep up with this on an monthly basis however, in some cases other adjustments may need to be made to clean up your transactions can including things like transactions that got booked without a class; entries that were made to an account when a subaccount should have been used, entries that were booked net that need to be grossed up, and entries that were booked into the wrong income or expense account or category. 

You could also have accounts, customers, vendors, or other entities that were created incorrectly and now is the time we will merged or deleted after the transactions are restated.

24. Tax Documents

As you receive these at the beginning of the year, keep them in a safe place and all together for easy delivery to your tax professional. Better yet, scan them in as you get them and upload them to your client portal.

25. Cash vs. Accrual Adjustments

Many small businesses use the accrual method of accounting to keep track of unpaid invoices and bills but use the cash basis to pay taxes. In this case, We will enter reversing entries to the file so the books are right for tax but then are reversed on January 1 back to accrual.

26. Close or Lock the Books

Now that everything is tied with a bow, no more entries should be recorded that have a date of last year or your balances will change and no longer reconcile. Some accounting systems allow you to close the books by preventing new entries; this is called locking or closing, so we use this feature. 

27. Budget for Next Year

How close did you come this year to meeting your budget? An analysis of the year can be made at this time, along with the creation of a new budget for next year based on what you learned and your upcoming goals.

28. Tax Projections and Plan

It is a really good idea to set up a tax projection or planning meeting with us well ahead of December 31 in case there are any moves you can make to save on taxes. This should include determining if you have deposited enough of your tax liability so that you will not owe a large amount come tax time.

You can also get a schedule of tax payments that need to be made in the coming year for the following year’s taxes. 

Conclusion

Of course, we can explain as well as help you complete all these items so that your books and taxes stay current, accurate and organized.  Reach out to us anytime so we can help keep the file clean and ready for your and tax needs!

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