1. Gather and Organize Financial Documents Start by gathering all your financial documents. This includes invoices, receipts, bank statements, and any other financial records. Organizing these documents makes the subsequent steps much more manageable. Make sure all transactions are accurately recorded in your bookkeeping system.
2. Review Accounts Receivable and Payable Examine your accounts receivable to ensure all invoices have been sent and follow up on any outstanding payments. Likewise, review your accounts payable to confirm all bills have been paid. This step is critical for an accurate portrayal of your business’s financial health.
3. Reconcile Bank Statements Reconciling your bank statements is a crucial step. It involves matching the transactions in your bookkeeping system with those on your bank statements, ensuring they align. This helps identify any discrepancies or errors that need to be addressed.
4. Review Your Inventory If your business holds inventory, perform a year-end count. This helps verify that your bookkeeping matches the actual inventory. Adjustments may be necessary if there are discrepancies between your records and the physical count.
5. Prepare and Review Financial Statements Prepare your key financial statements – the income statement, balance sheet, and cash flow statement. Reviewing these documents gives you a comprehensive view of your business’s financial performance over the year.
6. Assess Your Tax SituationEnd-of-year is also the time to assess your
tax situation. Estimate your tax liabilities and ensure you've made all necessary payments. Consider strategies to minimize your tax burden, like deferring income or accelerating deductions.
7. Plan for the Next Year Use the insights gained from your year-end review to plan for the next year. Set financial goals and create a budget. This forward-thinking approach helps position your business for success.
8. Consult with Your Accountant or Bookkeeper Finally, consult with a professional accountant or bookkeeper, like those at High Point Bookkeeping. They can help review your financials, suggest improvements, and ensure compliance with accounting standards and tax laws.
Sound Like Too Much to Do? Here’s Our Solution We’re aware of what a laundry list like this can do to our mental health, and finding the time to effectively close out the year can be a challenge while you're still running the business. This is why it’s best to keep consistent with these practices, and tackle them monthly and quarterly.\
It’s great to double-check before the turn of the calendar, but save yourself the stress and incorporate all these practices into your business routine.
You’ll thank us later!