As we approach December, small businesses everywhere are getting ready to celebrate another great year. But before you break out the bubbly and go watch the fireworks, it's time to start thinking about closing your books and preparing for tax time with your accountant. So we thought it would be a great idea to interview our very own Controller, Siena, who also happens to be a licensed CPA and uses Kashoo Online Accounting everyday to manage our own books. We asked Siena to give Kashoo subscribers some tips on how to save money and time when preparing to meet their accountant. She provided some very insightful information, which we’re excited to share with our Kashoo family.
Let's Get Started
K - When should I start preparing for my year-end?
S - As a general guideline, you should start planning at least 2 - 3 months before year-end to minimize workload. Primarily, you’ll want to ensure that all your income, invoices, expenses, bills, transfers, and adjustments are entered into Kashoo on a regular basis.
Secondly, be sure to separate all your business and personal transactions. This can easily be achieved by having a separate bank account for your business. However, if you are self-employed, it’s possible you may not have a separate business bank account, so it’s essential to always perform a bank reconciliation to determine which category each transaction falls in.
Another tip is to collect on any outstanding invoices from your customers. This isn’t always the simplest process, but thankfully, Kashoo has the ability to accept credit card payments on your invoices sent through our app. Now you can get paid ASAP and not have to wait for days or weeks to receive payment.
K - What types of documents will my accountant need?
S - The exact documentation required may differ based on the type of business you run and the regulations in your area, so it’s best to consult with your accountant. That being said, accountants will typically want the following reports:
- Balance Sheet - shows the balances of your asset, liability, and equity accounts at a specific point in time
- Profit and Loss - how much money your business has made within a certain period of time
- Trial Balance - lists all your accounts and their balances, "as of" a certain period in time
Fortunately, each of these reports and more can be found in Kashoo. One of the many great things about Kashoo is that you can grant access to other users. So you can give your accountant the ability to login and export any report or data they need, especially for verification purposes. This is also an awesome tool to use in meetings, whether you intend to meet in person, over the phone, or online.
K - Should I bring financial records from previous years?
S - If you work with the same accountant each year, then it’s usually not necessary to bring previous year’s records as they should already have your records on file. If you’re meeting with your accountant for the first time, it’s a good idea to bring your financial reports from the previous year that was closed. In any case, get in touch with your accountant’s office to make sure they will have everything they need.
K - Should I know what my tax deductions and credits are?
S - Various tax deductions and credits may or may not apply to your business. The good news is your accountant is responsible for knowing which deductions and credits you are eligible for, and they should be able to inform you of any eligible amounts. Quick Tip: Kashoo is most likely tax deductible! Ask your accountant.
If you track sales taxes on expenses in Kashoo, there’s a remitting tool on the “Taxes” page where you can enter a percentage for each deductible expense account. To save time, find out from your accountant what percentages your business is eligible for and calculate your sales taxes in Kashoo.
K - What are some common mistakes people make at year-end?
S - The most common mistake people make is not performing bank reconciliations regularly. A bank reconciliation verifies that you’ve correctly accounted for all the money going in and out of your bank/credit card accounts. If you wait until year-end to reconcile multiple months of transactions, it’ll be very hard to remember what happened in a particular situation, or how to resolve any irregularities you’ve discovered in your accounts.
Another common mistake to avoid is not having an organised work “rhythm.” Accounting for your business takes work, and it’s much easier to accomplish tasks by tracking your business operations in regular manageable pockets of time rather than large buckets at the end of the year. No one wants to spend their vacation doing 12 months of bank reconciliations, and yet it has happened to some folks.
K - What can I do in Kashoo to stay on top of my accounting?
S - There are a number of financial tasks you should remember to schedule and perform regularly such as:
- Bank Reconciliations on monthly basis
- Use the attachments feature to upload receipts and other relevant files to transactions
- Utilise the online credit card payments feature to reduce hassles and save time
- For US and Canadian businesses, take advantage of Kashoo’s payroll integrations
K - Any final thoughts or tips that are helpful to Kashoo subscribers?
S - Make sure and contact your accountant at least 1 - 2 months before the end of your fiscal year to plan a meeting with them. It’s also common to schedule a review meeting about 1 - 2 months after taxes are remitted.
Thanks, Siena, for all of that amazing advice. Year-end and closing your books can be stressful, but it doesn't have to be if you follow our Controller's wise words!