Making a List and Checking It Twice
The countdown is on. While visions of shopping lists, holiday decorating, and get-togethers may be dancing in your head, the countdown we’re referring to is year-end. If your business is on a calendar fiscal year, you know there’s a lot to do before the stroke of midnight on December 31. So, we’ve put together an end of year prep checklist of both “necessary” and “recommended” activities to help ensure that you sail smoothly into 2020.
December 31st is just around the corner and with that date comes a load of responsibilities and tasks that must be completed. If not prepared, the end of year tasks can be a cause of excessive stress and worry. This blog highlights the all-important year end checklist, meant to help you prepare, and complete your tasks more efficiently, and in a timely manner.
Clear Out Accounts Payables
- Capture expenses by paying your vendors and contractors before the end of the year. While you’re at it, make sure that you have W-9s from those vendors/contractors who are not incorporated and to whom you paid more than $600 for the year. It might also be a good time to make sure your vendor/contractor records are current. Then file your 1099s for all these independent contractors and non-incorporated vendors.
Accumulating Supporting Documentation for Every Balance Sheet Account
- The balance sheet, among other financial statements, will help you get a good picture of where your business is at financially and will help you plan and budget for the future. For this reason, it is vital that every account on the balance sheet is reviewed to ensure the accuracy of the numbers reflected on this report. Supporting documentation, such as bank and credit card statements, will be needed in order reconcile each account.
Annual Filing of Sales and Use Tax
- If you own a retail company and have been selling goods, it is generally required that sales tax is paid for each item sold. If sales tax was not applied to the item at the time of sale but the item was used or stored in a state, then use tax will generally be owed to that state. Filing of Sales and Use Tax must be done on a regular basis. For the state of Minnesota, filing can be done monthly, quarterly, or annually.
- Prepare a fiscal year-end trial balance.
- Review your profit and loss statement.
- Evaluate performance against your metrics/goals. If there’s a significant gap, explore actions to minimize it before year-end.
Assess and Adjust Financial Accounts
- Reconcile your bank accounts, credit cards, and money accounts. Make sure balances are equal to year-end statements.
- Make any journal entry adjustments as necessary, such as depreciation expenses or new fixed assets.
- Closeout temporary accounts (profit and loss accounts and dividend accounts) to Retained Earnings (or your company’s equity account).
Tackle Tax Obligations
- Clear out payroll totals in general ledger to payroll reports
- In order to ensure that your financials are accurate at the end of the year, you will want to make sure that all paychecks have been recorded and that employee wages, benefits, deductions and PTO are entered accurately.
- Run a year-end report of taxable sales and confirm that all the sales tax required of your company have been paid.
- Confirm that year-end payroll expenses match up with monthly payroll taxes in order to prepare the annual IRS Form 940.
- Prepare records for local, state and federal payroll.
- Deliver W-2 forms to employees no later than January 31; include accrued bonuses or special gifts.
Align with Advisors
- Schedule a meeting with your bookkeeper and accountant for a 2022 review of your anticipated financial results.
- Check-in with your financial advisor to find out if there are any beneficial financial moves you can take before the end of the year.
- Review insurance policies, coverage, and rates with your insurance providers to ensure coverage still meets your needs and that premiums are competitive.
Generate Goals for the New Year
- After you looked at where you’ve been, set some new goals for the coming year. If this feels like a big task, break it into chunks. For example, do you want to set a higher revenue goal? Are there some capital improvements you’d like to make? Can you keep expenses the same, or do you need to increase the budget?
- When you have an idea of what the new year might look like, prepare an initial monthly budget and cash flow projection.
- Creating an accurate and realistic monthly budget and cash flow projection is vitally important for the health and longevity of your business. It is impossible to know for sure what will happen within the next year and what unexpected expenses will come up, but with some planning and forecasting, you will be much better prepared to face any challenges and unforeseen circumstances that might lay ahead. This task will also give you a better idea of where you might need to make adjustments and cut costs.
Ringing In the New Year
As the tasks listed above are just a few of the many items that must be completed at year end, our team at All in One Accounting has compiled a general year-end checklist in order to help you with your planning and make sure that nothing important is missed during this process. In addition, our elite team of Accountants, Controllers, and CFOs are ready to help you accomplish any of the items listed on the checklist. Click here for a FREE consultation.