It’s time to discuss bookkeeping steps for the year end once again! Now is the perfect time to finish up your projects, get your accounting in order and start off the New Year with a fresh slate. Taking the time to get your bookkeeping in order now will make your tax reporting much easier come tax time. While all businesses are different and each has their own needs, you will find that it is always important to follow these basic steps:
Organize transactions and receipts
Keep all your receipts organized and stored within one place. If you’ve managed to do this all year, give yourself a big pat on the back! If not, you still have some time to get organized. This is also a good time to make sure you haven’t charged any business expenses to your personal account or vice versa. If you have, you need to make a note of each instance and gather the appropriate documentation for tax time.
Reconcile accounts
Sift through all your paperwork and match each transaction to income or expenses. It is important to make sure your account totals match exactly what appears on paper. This should give you some time to correct any mistakes.
Send invoices and make collections
Make sure you have invoiced your customers for all the products and services throughout the year. Then make sure the invoices have all been paid. If you find that some of your customers are behind on sending a payment, issue a reminder to ensure that your year end collections are correct.
Inventory
Another of the bookkeeping steps for the year end is to make sure you have a correct inventory count as of December 31st. You can get started with the basics now, meaning know how much inventory you started with, the amount sold, and the amount of inventory left over.
Assets
Now is also the time to make sure that any fixed assets you’ve acquired over the last year (such as machinery, equipment, or computers) have been properly recorded on your company’s balance sheet. Make sure all items are listed and that depreciation for each item is also included. If you need help calculating depreciation, contact your accountant.
Expenses
This is where you can maximize your deductions. Make sure you’ve made your 401k and IRA payments. This would also be a good time to make a few more charitable donations. It is also possible to deduct Internet and phone bill deductions as a small business owner. Check with your accountant for additional deduction ideas.
Loans
Make sure all of your loan information is up to date on your balance sheet. This is especially important if you have taken out any new loans or paid any loans off.
Mileage
While miles for commute are not tax deductible, other mileage for business is. Be sure to keep detailed records of your mileage from the year and include it amongst your tax deductions.
W-9 Forms
You will need to have a W-9 form for any contractor you have paid more than $600 to throughout the year. If you don’t have one on file be sure to have one filled out as soon as possible.
Income Statement
The last of our bookkeeping steps for the year end is to make sure everything adds up correctly. In other words make sure the correct numbers appear in your profit and loss statements. If the numbers don’t look right, search for additional receipts that might be floating around in your car or purse or consider if there were other projects that altered your balance.