While we celebrate family, friends and the season of giving, there is one thing that brings nightmares to every small business owner: year-end finances.
If the thought of wrapping your year-end numbers into a shiny package for your accountant drains your holiday cheer, don’t be discouraged. We’ve got plenty of suggestions to keep away the chill that settles in when you fire up your accounting software.
When is The End of the Year?
Before we begin, it’s important to note that the end of the year doesn’t always correspond to a calendar year. Some companies and governments end their year on September 30. Use whatever date makes sense for your industry.
Accounting Everyday Keeps the Nightmares Away
The best way to prepare for the end of the year is to take care of your accounting on an ongoing basis. Depending on the size of your business, it may not be necessary to look at your books everyday.
Here are a few suggestions for handling your account on a regular basis to make year end accounting a breeze:
Separate your business and personal finances.
Not only does it make accounting easier, keeping your finances in the same pot may make you personally liable for business problems. Not sure where to start? Check out our suggestions for untangling your business and personal finances.
Attach scanned or digital receipts to accounting software transactions.
When it comes time to prepare documents for your accountant, you won’t have to worry since everything is already accounted for.
Make time for accounting.
It may not be as fun as other things in your life, but if you can make time to go to the dentist, you can set aside at least 30 minutes per week for accounting in your schedule.
Create good habits and document them.
Establish procedures for each task and document them as thoroughly as possible. Imagine you are preparing someone else to take over your books and write your procedures so anyone can understand what’s involved. This comes in handy when you need some time off and can give the job to another staff member for a week.
In addition to scheduling time to work on your accounting, create space in your calendar for important due dates, like taxes. Use your smartphone an/or schedule to remind you when things are due.
Call in the big guns.
Even if you’re handling your own books, a professional can help you establish procedures, keep up with compliance, and let you know what you need to do year round to make tax time less stressful.
What To Do Now
Even if you haven’t been keeping up with your books during the year, there are a couple of tasks to complete now that the end of the year is upon us. Here’s what to do now to prepare:
Check Your Accounts Receivable
Now’s the time to check on your outstanding balances. Review what customers still owe and send statements to get as many bills paid as possible before the end of the year. Try to start with clean books to make next year’s accounting simple.
Check Your Accounts Payable
Extend the same courtesy to businesses you owe money to. If your cash flow allows, pay off as many expenses as possible before your year ends.
Count Your Inventory
You’ll need to let your tax professional know the value of your stock on hand, so count all remaining inventory and know what they are worth. This may need to be communicated as assets on your tax return.
The Year-End Process
Give yourself about two hours at the very end of the year to do your final counts. During this process you should list:
- Outstanding checks and their value
- Cash remaining in the business
- Undeposited funds (pending credit card payments count here)
Provide this list to your accountant. They will need it to do your taxes. Also download a copy of your accounts payable and receivable. This provides you with a snapshot of your accounting at that moment.
That's All There Is To It!
Preparing for year-end finances isn’t as difficult if you make financial management a priority all year long.
If you’re looking for an accounting system that gives you the power to see where you stand quickly and easily, give Kashoo a try. You’ll get the ability to connect your bank accounts to improve reconciliation, as well as powerful reports that tell you everything you need to know.
Save yourself the headache of keeping lists and tracking everything manually. Invest in yourself this holiday by giving yourself the gift of clarity when it comes to your business finances. Try Kashoo today!