Can you believe we’re already heading into the final stretch of the year? With the holidays just around the corner, it’s easy to get caught up in the festivities. But there’s one important thing you shouldn’t skip out on doing: your year-end bookkeeping.
Year-end planning and auditing not only helps you avoid any unexpected surprises during tax season, but it also gives you a clear picture of your business’s financial health. This allows you to make informed decisions as you head into the new year.
So, before you sign off for some much-needed relaxation, here are six steps you can take to make sure your books are in tip-top shape and ready to close out the year.
1. Review Your Accounts
The first step of your year-end tasks is reviewing all your financial accounts. Take a close look at your income and expenses to see how your year shaped up. Did you meet your revenue goals? Were there any unexpected expenses? This review will help you get a clear picture of your business’s financial health and can highlight areas for improvement or celebration as you close out the year.
Pro tip: Run a Profit and Loss (P&L) statement and a Balance Sheet to evaluate your financial position and ensure everything looks accurate.
2. Reconcile Your Bank Accounts
Reconciling your bank accounts is an important part of year-end bookkeeping. Cross-check every transaction from your bank statements with your records to make sure they match. This step ensures that all income and expenses are accounted for and there are no discrepancies.
Reconciliation might feel tedious, but it prevents errors from carrying over into the new year. It also gives you peace of mind knowing that your financials are accurate.
3. Review Your Employee Records
If you have employees, now’s the time to review their records to make sure everything is accurate before you start processing year-end payroll and preparing W-2s. Ensure that employee names, Social Security numbers, and addresses are up-to-date and that all payroll taxes are correctly calculated.
This is also a great opportunity to review any benefits or deductions and confirm that they’ve been processed properly throughout the year.
4. Review Your Inventory
For businesses that manage inventory, you should review your stock levels before the year ends. Analyze your sales data to identify which items are your best-sellers and which ones have been slow to move. This inventory review helps you plan for the upcoming year and allows you to make smart purchasing decisions for Q1.
5. Perform a Physical Inventory Count
It’s not just about the numbers—getting a hands-on, physical count of your inventory is equally important. Compare your physical inventory count to your records to identify any discrepancies. This is also a great time to spot damaged or obsolete items that you can write off before the year ends.
A physical inventory count helps ensure your financial statements are accurate and reflect the true value of your business assets going into the new year.
This service is perfect for catching errors, ensuring compliance, and giving you peace of mind that your numbers are accurate.
6. Prepare for Tax Season
Even though tax season might feel like it’s months away, it’s never too early to start preparing. Reach out to your tax preparer now to schedule a meeting and review your financial situation. Preparing ahead will allow you to maximize your tax deductions, take advantage of any tax-saving strategies, and avoid the last-minute scramble.
Also, make sure you have all your important tax documents in one place—such as receipts, invoices, and payroll records—to make tax filing a breeze.
If you find yourself scrambling during this time of the year, it might be time to hire a bookkeeper to help you stay on track monthly. The end-of-year season shouldn’t cause you stress if you’re managing your books properly in the first 11 months of the year! For bookkeeping support, book a free consultation here.
