The Only End-of-the-Year Financial Checklist Your Small Business Needs
Do you remember Aesop’s fable about the ant and the grasshopper? While the grasshopper was busy making music all summer, the ant worked hard storing food away for the long winter. The story didn’t end very well for the grasshopper! When it comes to your end-of-the-year business financials, save yourself some stress and be the ant. Get ready for the New Year and the upcoming tax season by checking each of these financial to-do’s off your list before the ball drops on January 1st.
Reconcile bank accounts and credit cards
Reconciling your bank accounts and credit cards is one way to ensure you haven’t missed recording anything throughout the year. Ideally this is done monthly, but at the very least it should be done at the end of the year. A bookkeeper can stay on top of these menial tasks for you!
Income Statement
Also known as your Profit and Loss statement, check to guarantee that your business revenue and expenses are correct prior to filing your earnings with the IRS. If you’ve been in business for longer than a year, this is also a great opportunity to compare balances to prior years. Uncharacteristic increases or decreases could indicate missing transactions, mis-classified expenses, or other potential issues. Take advantage of this end-of-year review to look at any profit trends and the overall performance of your business so you can better prepare for next year.
Balance Sheet
It’s important that you validate all your current balances. This includes the following: checking, savings, and credit cards, any loans and lines of credit, payroll liabilities, sales tax liabilities, prepaid expenses, and deferred revenue. If your business is product-based, you’ll need to take a current inventory to make sure your inventory balances are accurate.
A bookkeeper is a great resource to help you with your accounts receivable and accounts payable. There’s still time to track down unpaid invoices and collect before the end of the fiscal year! It may be possible that you’ll need to write off any balances you won’t be able to collect. Your bookkeeper can also help you with often overlooked Fixed Assets, ensuring that depreciation is recorded and expense accounts are reviewed to confirm you don’t miss capitalizing anything.
Cash Flow Statement
Verify that your cash balance on the Cash Flow statement matches the cash balance on your balance sheet. A bookkeeper will check that your Cash Flow statement includes all operating, investing, and financial activities such as loans and repayments.
End of Year Adjustments
You should check for any 2018 adjustments that will need to be entered and ensure that the previous tax year matches the balance from the beginning of the year, so you can officially close your books on December 31st.
Check your payroll
Be sure to inform your payroll company of any changes needed for next year’s payroll. If you’re offering benefits, bonuses, or deferred compensation, you’ll also want to check that these are also accounted for.
Collect W-9’s
If you’ve paid more than $600 to a vendor, you’ll need to get a W-9 from them. You’ll need this in order to issue them a 1099. Be on time with this one - 1099s are due to the IRS on January 31st.
End of Year Forms
January 31st will be here before you know it! Be sure you’ve filed all 1099 and W-2 forms with the IRS before then.
Gather and organize receipts
Hopefully you haven’t been shoving your receipts into a shoe box all year. A bookkeeper can categorize your receipts for you and will likely have an elegant software solution to organize your receipts all year long - even the paper ones! If you’ve stayed organized all year, completing this end-of-year checklist should be a cinch! But if you’re worried about being that grasshopper, consider hiring a bookkeeper to help you get on track for December 31st and beyond.
We are ready to help you get on financial track with solutions tailored for your needs. Contact us today to schedule your free consultation!