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Key Steps to Prepare for Your Accounting Year-End
Posted by Sylvia Lagerquist, CPA
For most small business owners, the end of the calendar year also signifies the end of the fiscal year, and this means making sure that accounting information and records are in good order so that the year-end closing process runs smoothly.
Of course, that’s easier said than done. For a lot of small business owners, the accounting year-end is a source of great stress instead of relief. The best way to avoid that stress is to be prepared for success, by taking the right steps today.
Here are four key steps you can take to make your accounting year-end smooth and productive:
Step 1: Report, Reconcile and Review
This means making sure that core accounting functions are all up-to-date. Send out any invoices that may have been delayed, and make sure that you have accurately prepared and presented expense reports.
Then, take the time to catch up on your bank account reconciliation. Ideally, this would be performed monthly. Now is the time to ensure that you’re fully caught up, so that every bank transaction is accurately matched by a transaction record in your accounting system.
Step 2: Check Payroll, Check Payments
This means confirming, first of all, that your company’s year-end payroll expenses are matched with your monthly payroll taxes, so that you’re in compliance and ready to complete annual W-2s.
Then, check your tax payments. To do this, first review your year’s taxable sales and verify that you have paid all applicable sales taxes. Then, check your quarterly estimated tax payments made during the year and see if you are close to budget as you anticipate paying your fourth-quarter estimate in mid-January of next year.
Step 3: Make Sure You Have W9s for your 1099s
Many small businesses use contract labor or freelance resources to help them with projects. Any provider of services whom you are paying as an individual or an unincorporated business and for whom the value of services rendered exceeded $600 this year needs a W9 form filled out and on record with your business, so that you can turn around and issue 1099 forms they need in order to complete their taxes.
Step 4: Try Your Trial Balance
Finally, it’s time to run a trial balance report and see if the balances listed in each of your general ledger accounts is accurate. Remember that ledger balances are organized into debit and credit balances, with assets and expenses appearing on the debit side and liabilities, capital and income appearing on the credit side.
Taking these four steps will help you clean up, ramp up and prepare for success as you and your accountant begin work on your taxes following the end of the year. To learn more about how to successfully prepare your business for the accounting year-end, please consult with your professional CPA.
- 5 Year-End Tax Preparation Tips That Will Make Your Accountant Happy
- 10 Crucial Year-End Closing Procedures for Accounting
- What is a Trial Balance?
Image Credit: GDC (Flickr @ Creative Commons)
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