Year-End Checklist for small businesses
2021 is only a few weeks away, can you believe it?. Although, 2020 brought difficult times in every aspect we can imagine, we remain strong through adversity and so does your business.
The Fiscal Year-end has arrived, and although you probably are busier than ever we advise you to complete the following list of tasks before the year ends for a smooth transition to the new year.
1. The main and most important thing is to get your Financial Statements up to date; whether you complete your own bookkeeping or you have a Bookkeeper on payroll or outsourced, you need to ensure your financial statements are accurate. This includes the reconciliation of all your bank accounts and loans, and the proper classification of all the transactions your business had in the current year.
We encourage you to look a bit deeper into the following:
- Any suspense/ Ask my accountant transaction in order to classify them properly any personal transactions made with the business banking must be classified as Personal.
- Make sure any negative account in your statement makes sense (e.j Depreciation, Amortization, Distribution) Usually no other account should have a negative balance.
Liabilities, get on top of this to see if there is any payment you need to make before the year ends so you don’t get charged any additional interest.
2. If you have employees and run payroll, it is important to review the 940/941 filing made throughout the year to ensure there are no adjustments necessary. Ideally, the number reported to the IRS on the W-2 must match with the payments made during the year and also match the sum of all your forms 941, by doing this you will avoid any complications down the road. Also, ensure that taxable fringe benefits, such as third-party sick pay or a company car, are accounted for.
3. If you maintain a physical inventory, it’s that time of year where you want to make a physical inventory count. Before the year ends make any adjustments necessary. If the discrepancy is high, it will be good to start digging into the reasons why.
4. Update your Vendor’s Information, by requesting updated W9s before the end of the year, you will have handy the information you need to issue the forms 1099s in January.
5. Reconcile Account Receivable, look into your oldest past due invoices, it may be time to get on top of those. By performing this you will have a glimpse on how efficient your business is at collecting revenues. Maybe, you may want to reevaluate your process and adjust it to improve for next year.
6. It’s time to set your next year Goals, were you close to your last year goals? What do you think you need to do differently next year to accomplish your Goals? Set up a new action plan if necessary, open your mind to new services/products if you think your revenue must increase. Have you looked into your employees? Do you have a good culture around the office? By taking care of your employees and creating a better environment you are helping your business, their effectiveness will improve if they feel listened and supported.
7. Get your documents ready for Tax Preparation, whether you do it yourself or you have an accountant who completes your taxes, have everything you need in hand. It will save you time and money (you definitely want to avoid any penalties for late payments and also you want to make sure you are claiming all your income and expenses)
There are other things you might want to review and evaluate like staff, website, incentives, backing up information, Accountable Plans, Accounts Payable, Tax Planning, Marketing Strategy, Budgets, Forecast, etc. The important thing is to start working on it, don’t wait until the last minute. Time is precious and if you complete one task every day, you will be able to complete the list without much stress. If you continue to work on your day to day without leaving any time to work ON your business it will be difficult to get your business to the next level.
My Books and Taxes is always here to serve you, if you need assistance with your books or your taxes, please feel free to contact us at [email protected] or book a call