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In the midst of a pandemic crisis, business owners continue to face new financial challenges. Whether it’s short or long-term financial projections, minor bookkeeping inconsistencies can impact the growth of your business.
It is no secret that things can spiral out of control at the end of the fiscal year. If you want to avoid the nightmare of endless evaluation of accounting tasks, ensure the accuracy of various bookkeeping tasks at the end of the year.
Once you have organized and updated bookkeeping, you can expect accurate accounting processes. In fact, inaccurate and irregular bookkeeping activities will make it harder for accountants to generate accurate financial reports and make sense of financial data.
Your year-end bookkeeping tasks are integral to the current and future financial health of your business. Organized bookkeeping boils down to ensuring everything is under control. When a new fiscal year knocks on the door, businesses don’t have to take a leap of faith.
In fact, thorough bookkeeping records can minimize audit risks and simplify taxation. It is a frustration that no businesses need to drag to the next year. Similarly, organized bookkeeping activities ensure that your business meets financial projections and achieve planned growth.
Whether you achieve marginal or significant growth, organized bookkeeping will help you plan better for the next year. Accurate and reliable data are the hallmarks qualities of perfected bookkeeping.
Let’s take a look at the seven (7) fundamental year-end bookkeeping tasks that will help your business operate and transition to the next year with ease:
Your first year-end bookkeeping tasks should be to reconcile bank and credit card statements with monthly income and expense reports. On the surface, it may sound straightforward, but it requires a lot of time and effort.
However, if you use automated bookkeeping software, you will be able to reconcile bank and credit card statements’ data easily. The idea of reconciliation is to make sure you’re not left behind on any payments. Reconciliation of statements is also an excellent opportunity for businesses to identify any red flags.
Realistically, you should go through each bank statement and individual credit card statements. Your objective here is to check the amount against your expense and income reports. And keep a close eye on the amount that doesn’t match or have an inaccurate classification in the database.
When it comes to year-end bookkeeping tasks, the last thing you want to do is rush. Wisdom demands to take a step back and review the setbacks and opportunities. It may be easy to review long-term outcomes month after month, but you need to be more self-reflective at the end of the fiscal year.
However, you don’t have to drown yourself in the infinite data sets and countless data entries. Instead, take a few hours to evaluate your financial structure and ask if you can make any improvements for the next year. The more considerations and ideas you brainstorm, the more possibilities to achieve better financial outcomes will become a reality for your business.
At the end of the year, you have to prioritize inventory reporting to balance your financial books. Accurate inventory management also helps businesses track losses and other inconsistencies. It is, however, quite common for businesses to delay inventory reporting until January of next year. Still, make sure to complete the count before the arrival of 31st January.
Gathering 1099 independent contractors’ data in January can disrupt your other bookkeeping tasks. Although 1099 compliance for independent contractors is important, it shouldn’t divert your focus from, say, sales growth at the beginning of a new year.
Mostly, business owners ask for a W-9 form from contractors before the end of the year. Unfortunately, not every independent contractor manages to send his or her W-9 form. Nonetheless, it is vital to understand that this burden falls on your business’ shoulders. You can review and input each independent contractor’s 1099 data in QuickBooks.
Recording and reviewing AR and AP transactions is always at the center of bookkeeping. It is arguably the most crucial task on your year-end bookkeeping list. The better recording of AR and AP entries means more simplification for accountants to generate accurate financial statements.
In accounts receivable, review and confirm your billable goods and services. It is also a great strategy to secure business revenue before the year ends. In accounts payable, however, ensure that you have no unpaid invoices to independent contractors, vendors, or other service providers. Your goal is to spot and resolve outstanding bills and avoid surprises later on.
Another fundamental year-end bookkeeping task is to have a budget for the New Year. Your budget for the new fiscal year should be realistic and ambitious at the same time. Ultimately, create a budget that can help you achieve your annual financial goals faster. Whether you prepare monthly, quarterly, or yearly budgets, make sure to fill out the main details of the new fiscal year budget before 1st January.
Tax preparation is one of the most daunting tasks business owners have to go through each year. However, if you follow the other aspects of bookkeeping tasks flawlessly, it will be easier to create a tax plan. In retrospect, business owners need a broad tax perspective. Remember, there’s always more than one way to decrease the taxable amount at the end of the year.
Most established business owners understand the vitality of year-end bookkeeping activities. It is imperative to understand that you cannot fixate on a single task and overlook others. For instance, a single recorded inconsistency can impact an entire column of accounts receivable on the balance sheet.
The truth is that poor bookkeeping can create a sense of disarray and uncertainty. Ideally, you should have a balanced approach and prioritize each year-end bookkeeping task without bias. If you want to wrap up the current fiscal year and get ready for the next year, pay close attention to your bookkeeping efforts.