In business, making sure that every transaction is recorded and you have an accurate report of every expense you made throughout the year is important.
This helps you in keeping your accounting book clear so you know every year you are doing smooth transactions.
However, businesses have to wrap up their financial records every year. It’s not just daunting but it can be a real hassle if you haven’t tried before or you don’t know the process.
For every business, their account department plays a vital role. Understanding where you are spending the money and what else is going inside your company.
Apart from handling taxes and paying to others, there are lots of things you are going to need to make the checklist.
Why Do You Need Year End Accounting Services?
Before you jump to the checklist. It’s important to understand the need for year-end accounting services for the business.
Every company regardless of the niche and size carries responsibility toward their third parties and stakeholders. These are directly or may be indirectly connected to the business.
The company has the responsibility of sharing their overall reports related to finance. It includes a profit & loss statement, balance sheet, revenue, and expenditure account at the end of every year.
Also, the company has reliability towards the government bodies as well as taxation authorities. They are liable to submit their taxes on an annual based which are determined by their state,
The responsibility to pay the taxes regarding operation and income for the betterment of the place is an important factor.
But apart from this, the companies have the responsibility to pay their trade taxes based on where they live and what their state law demands.
To make sure that companies are fulfilling these liabilities on time, the firms require accounting services. Such options include payroll services, accounting outsourcing, virtual CFO, etc.
Checklist For Accounting Services To Keep Your Year-End On Track
When it comes to making the checklist especially in accounting, you are going to need lots of things to add. The process is not easy but it can make the whole bookkeeping on track.
Also following the checklist gives you a clear idea about what you are doing and you can save your time a lot.
1. Reconcile The Books
Start with your bank reconciliation, it will help you in understanding the transaction you made throughout the year.
Also, make sure that bank reconciliation is ensuring the recorded transactions that happened and its matched with your bank statement.
Well, if you are getting the same result in both it shows a positive sign. The signs say that your business is doing everything in the right way.
If you feel or notice any kind of discrepancy, it’s time to fix it.
When you are doing the calculation, make sure you are adding the taxable income too. It will ensure that your financial records are up to date and complete.
In case of incorrect numbers, it will help you in understanding if you are overpaying for underpaying your income taxes.
When you are updating, make sure to reconcile other accounts too. Well, it includes :
Payroll account includes the recording of employee’s compensation. It includes-
- Gross salaries, bonus, commissions, and wages
- Payroll taxes like federal income tax, medicare taxes, etc
- Health insurance premiums, saving plans, etc.
- Employer’s Portion for social security taxes, federal unemployment taxes, etc.
- Employer’s portion or expenses of fringe benefits including paid holidays. Sick days, pensions, health & dental insurance, saving plan contribution, etc.
Business Credit Card Accounts
The business credit card accounts include the transaction made on business credit cards for the company and its requirements.
The account is used by the business instead of individual personal use.
Business Loan Account
Business-related transactions including loans and their repayment go into this account. The amount that had been used for the repayment or taking one for the business purpose.
The amount is important for the overall accounting, so you know what amount is in real to carry the calculation accurately.
2. Review The Profit & Loss
Evaluating the profit & loss statement for eerie small businesses is important.
It helps in understanding what you have earned in your net income and what decision helped you financially.
Also reviewing profit & loss can help in –
- Giving you insight into the business and its positive or negative net earnings.
- Creating new financial statements for the business.
- Showing the shareholder where your company is standing from a financial viewpoint.
When you review your profit & loss, you can get a whole idea of the financial situation in business.
Pro tip: keep it handy to do the regular reference, so you can know if you are going in the right direction.
3. Review The Assets Accounts
The asset accounts are the next important part. Look through every detailing to understand if there is an error or mistakenly written ones.
If you have certain changes in your fixed asset account, then keep in mind to record the changes immediately.
Also, it will directly affect the balance sheet and statement. So make sure you are not skipping this.
4. Review The Bookkeeping
Booking is the process where all kinds of transactions related to the business are recorded.
It’s important for doing the recording, classifying, and organizing the financial accounting that was made during the business operations.
Also, bookkeeping is not accounting.
The purpose of bookkeeping is to manage the different responsibilities that happen in the business.
However, the prime focus is to manage the operational transaction, including recording and reporting for the business.
When you review the bookkeeping. Here are a few points to remember –
Review the process on ist ongoing basis. Make sure it’s before the end of the year and have no outstanding left.
- Keep your software reading bookkeeping updated and reconciled.
- Make sure to start the year with some planning regarding the tax.
- The analysis of accounting information is properly completed and has its statutory requirements.
5. Keep Your Accountant On Board
Accounts are more understandable when you are doing the work from the beginning. Make sure that you discuss with them so you can get the idea of what is needed to change.
Also if there are any questionable transactions, make sure to ask them, so keep the book reconciled.
Not just that, for small business owners it can be hard to keep up with their accounting since they are not directly involved.
Keeping your accountant handy, you can keep the process hassle-free for you.
6. Get The Help From Professionals
Tax is complicated. For a small business, making sure you are keeping up with all taxes and your business is not overlooking anything. It’s important to get help from tax professionals.
The tax experts can estimate the year-end liability and you can get a much better insight into how it will look.
Moving your taxes before year-end can give you lots of advantages. Instead of paying at the end, you can pay beforehand to keep the extra benefit for your business.
Also if you have taxes to pay then it’s better to get an early month notification instead of a few weeks. It gives you more time and also stays prepared.
7. Do Review Of Organization
The important part once you are done with the financial year-end work is looking at your company’s structure.
For your business, it’s crucial to look out for the points that might be the weak or vulnerable side. Also, do the review to highlight the strength of your business.
Make sure to keep the details when you are reviewing your business chart, including performing a SWOT analysis.
Identify the loopholes that are causing bad to the financial side of the production. Fill those gaps before it expands too much. Keep the long-term vision refining for a profitable year for you.
8. Check the CashFlow Daily Basis
The important part of the checklist is the cash flow of your business. When you have a healthy cash flow in business, you know you can meet all expenses, pay bills, taxes on time.
Also, it helps you in understanding the spare amount of cash available at the end of the day.
You can pay the vendors and suppliers as well as other clients on time. There are lots of payables where you can get the relief if you pay in advance.
9. Prepare The Invoices On Time
Invoices are messy if you don’t prepare before the deadline approaches. Well, make sure you clear the invoices and don’t let them unpaid for a long time.
The common time is 30 days, if the date is due so far it’s important to raise the invoice. It’s also for forecasting your revenue for the months.
In the end, you will know all invoices are paid, so you can clear the accounting.
To keep it easy and get the payment past, you can use the templates. It will help you in creating invoices much easier and send them on time.
10. Do The Tax Planning
Tax planning is accrual regardless of whether you do small or large scale business. This can help you in achieving the goals much better and effectively.
Tax planning is helpful to find out how much money you are going to pay on taxes. Also, you can get in maximizing the tax liability through the allowances uses, exemptions, deductions, etc.
Tax planning at the end year allows more opportunity for the transaction and savings from taxes.
You can hold the invoices to the customer, and keep them until January as it will reduce the taxable income of that year.
Pro Tip: Tax planning helps in understanding the process and keep it more ready and you have more grip
11. Focus On Developing Budget And Forecast
For a business, having the habit of developing a budget can help you in keeping your next year on track.
With a budget, you will know the expenses and overall financial investment you need to get a business to function properly.
Create the milestones along with building a budget for every quarter. The budget will help you in guiding your business.
Also, you can do compassion to understand how far you progressed and what else you need to keep in mind for keeping the accounting on point.
12. Keep Your AR And AP Accounts Clean
Account Receivable ( AR) is balance money that is on hold and yet to be paid by the customer or suppliers in exchange for delivered goods and services.
Whereas Account Payable is balanced money that the company is obliged to pay off to their suppliers in exchange for goods or services received. . This is a form of liability and is mostly in short-term debt.
When you are doing the year-end accounting, keep your AR and AP account clean. Take a quick overview to run an aging report on both accounts.
Well, you might get a few issues which include –
One of the mistakes you can get is not balancing its credits against the invoices that are old.
Gather the outstanding balances in reliable accounts that are bad debt and never going to collect.
Do the research on the old age payables as it might have some outstanding account balances. Make sure you do it so you can find any suspicious statement requested by vendors or suppliers.
13. Keep Your Bookkeeping Accurate
Accounting is heavily based on bookkeeping. It’s important to make sure that you have recorded all the transactions accurately and on a daily basis.
Before you end the account, give an overview to notice any kind of missing transactions. If you find one, update it on time.
The accounts are going to need the bookkeeping to check every transaction and accounting records to match the balance in the ledger.
Pro Tip: To make sure you are not missing any income statement, use the balance sheet, and do the review on every transaction in the account.
With this, you can ensure that the bookkeeping is accurate.
14. Do The Inventory Count
No matter what business you do, the inventory count is important especially because it’s used for the calculation of COGS or Cost Of Goods Sold.
It’s important in the beginning as its major financial indicators.
Do the counting before the year ends, so you will know what you have in hand for starting a new year.
And it will help in understanding the goods damaged, stolen or something else happened during the operation.
15. Reflect The High Levels
When you are at a business meeting at the end of the year-end, it’s also a good time for reflecting on high levels. The time is crucial to do analyzing the business.
Also, keep the documents where you have the information regarding the reflection time. Make sure it’s easy to retrieve whenever you want.
This will help you in achieving your business mission.
When you are reflecting on the high levels, here are a few questions.
- What happened right or wrong with the business?
- Is the income what you have been expecting?
- Did you have fun or was it stressful?
- What lessons did you learn?
- Which goals you successfully achieved or what left?
16. Check The Payrolls
Well, payroll is important in accounting as well as for the business. The accounting and records go hand in hand in payrolls.
There is no accounting completed without this. Around 50 to 60 % cost spent on employee benefits and compensation by an organization. It also includes the statutory contribution.
Well, Payroll is a process that includes paying the salary to the employees. The department takes the decisions regarding the deduction in wages, keeping the records and reality of pay data.
It’s helpful to understand the accuracy of paying the unpaid wages and salaries to the employers. It’s a liability in your fiance accounting of the year-end.
17. Organize The Receipts
For a small business, it’s crucial to keep their recipients up to date. Also, it keeps the records accurate and fewer chances of errors. It’s also important for the business, especially for tax returns.
Receipts can help you in keeping the inventory, office supplies, travel, advertising, and other business-related purchases.
Well when you are sorting it out, here are few points to organize.
- Keep it organized the chronological order
- Keep it folders and labeled
- Short it on expense type
- Store it on cloud
Pro Tip: Organize the system and keep it easy to find. With this, you will never end up misplacing the receipt or forgetting its account information.
Checklist For Accounting Mistakes In Small Business
When it comes to business, accounting is an important part that should not be ignored. The work is basically for accountants or bookkeepers.
But lots of small businesses don’t consider the options instead of doing it alone. It can be adding balance and keep the work more hassle for business.
According to Accounting Today, one-third of small businesses go for a bookkeeper. 66%small businesses have no intention to get an accountant.
Well, there are some mistakes that you should avoid when you are doing accounting services.
Not Hiring The Experience Professionals
The biggest mistake you can do is not considering a professional accountant. They are a financial professional and have more ideas about what they are doing.
Being a small business owner, chances are high that you might be not aware of lots of things regarding accounting.
Hiring a professional can help you in minimizing the errors and expense tracking, timely basis payments, balancing the accounts, etc.
There are lots of things you need to handle, including taxes, financial transactions, etc. But again, here you are not saving money for the extra help.
Not Tracking Cost Accurately
There are lots of things you need to accurately record in accounting and bookkeeping.
When you are not doing it, this is keeping your business in a vulnerable state and losing money. You might be paying bills late which is adding headache to the incoming tax months.
This can increase issues and your business might be facing lots of problems in the future.
The business needs the tracking of its cost that is used for running and making sure to keep it ready for anything risks.
It’s important for the accounting system to the spreadsheet or for maintaining the books.
Keep track of transactions so you are understanding the business cash flow.
Not Keeping Personal Finances Away With Business Accounts
Small business owners should understand the importance of a financial account between personal and business.
Especially the business when it’s in the growing stage. It becomes hard to not blur the line between accounts.
Do not keep the personal expenses adding to the business account. Keep the account separately.
Not just its a bad move but mixing together both accounts can be a headache for doing taxes.
Frequently Asked Question ( FAQs)
Accounting services are helpful for making business accounting and financial perfect. It includes preparation of taxes, track expenses, financial services, revenues, providing consulting, production of financial records to business.
It keeps the business finances different from fraud. This is helpful for keeping the business easy to flow.
Accounting services help the business to have an overview of where the money is going and the financial transaction. It gives a better idea about whether the business is earning profit or losing it.
Accounting plays a vital role in business. It includes all help in tracking income and expenditure.
It also manages the investors, ensures statutory compliance, government taxes, and other important information regarding financials. And its decisions to get best for business