January 7, 2013 by Ed Becker
The year has come and gone and now is time to get information to your CPA for tax return purposes. In reality, a small business should be performing all of its essential accounting functions during the year and on a day-to-day basis.
Let’s face the facts: small business owners get sucked into daily fires and it’s often the case that their accounting gets pushed to the side. Unless you have a bookkeeper or use the services of a professional outsourced accounting firm such as Outsource Your Books LLC (OSYB LLC), it’s not unusual to be behind and stressed out about it.
OSYB performs a variety of functions for its clients during the year, and a complete review is done at year end so that our clients data files are ready for tax time.
Suggested Year End Procedures:
This is just a sample. Depending on your industry, complexity of business, software used and many other variables, the list can be much more complex.
- Reconcile bank and credit card accounts. Paypal is considered a bank account and is sometimes neglected in this process.
- Reconcile all loans and lines of credit, and verify that principal and year-to-date interest is accurate.
- Update fixed asset records and record deprecation
- Amortize intangible assets
- Ensure that all subsystems for Accounts Payable and Accounts Receivable tie to your general ledger balances
- Tie out all wages, payroll taxes to W-3’s and quarterly payroll returns
- Prepare and issue 1099’s to recipients by January 31st. For more on this visit our prior blog post “Get Ready For Year End-1099 Time”
- Are all prepaid expense accounts adjusted?
- Have necessary accruals been recorded for accrual basis taxpayers?
- Reconcile petty cash account
- Clean up all A/R and A/P accounts to ensure that credits and/or overpayments are correct
- Review all posting for the year to determine if there are any items that need to be reclassified
- Obtain documentation for all charitable donations made throughout the year
- Close out any Distribution accounts
- Make a complete back up of your data file. Most clients should be doing this daily, but I have seen cases where months of data needed to be re-created due to lack of backups.
- Condense and archive your QuickBook’s file. This can help with performance on your file
- Review and determine if any checks need to be voided and reissued before you finalize your December 31st bank reconciliation
- Write off any bad debts
If you are in bad shape, now is not the time to panic. Now is the time to bring in a professional who can do this for you and provide you with the peace of mind you need. Focus on growing your business and leave accounting to the experts.
For a free year end check up, feel free to contact us.