(3 minute read)
The end of the year can be an overwhelming time for anyone running a business. Here's a list of important accounting tasks to help get you through it.
1. Finish bookkeeping
Although taxes may not be due for a few months, your books should be up to date as soon as possible after year end. The one thing guaranteed to make bookkeeping more difficult for owners and accountants is time. Get it done now while everything is still fresh in your mind.
2. Check payroll
Sometimes payroll and deductions can get off track during the year. This is especially likely if you have new employees or changes in employees in the year. It's best to check for each employee just before year end. That way corrections can be made within the year.
3. Count inventory
This is especially important for any business who needs to get an audit done. The closer to December 31st the better, but a few days past is acceptable if needed. You need this count to make sure your inventory system is working and your cost of goods sold is correct.
4. Agree income to sales records
Income is the life blood of the business, but it's possible that some went missing along the way. Check that your sales records agree with your accounting records. If something hasn't been charged out yet, now is a good time to…
5. Issue invoices
However, if you're a service company and have work in progress you may want to consider holding off. If you invoice in January you won't have to pay tax on that invoice for a whole extra year. (This doesn't apply to designated professionals -> lawyers, dentists, doctors, veterinarians, chiropractors & accountants… damn)
6. Pay dividends / bonus
If it's part of your financial plan make sure that any dividends or bonuses are paid out before January 1st. If you don't have a plan consider having a chat with an accountant.
7. Organize receipts
Go through your records and make sure you have all the records you need. This task becomes a whole lot easier if you have a digital system. If you're still pushing paper look to digitize as soon as possible.
8. Make adjusting entries
Even if you've been on top of your bookkeeping, most companies require a few journal entries at year end. Speak with an accountant if you're not completely sure how to do them yourself. Below are a few common adjustments:
Write off A/R
9. Reconcile accounts
Make sure any bank, credit or loan account final statements agree with the accounting records at December 31. In some cases, often with bank accounts, there will be differences. This is due to cheques written near year end or deposits received that haven't yet went through the bank. For these accounts you will need to do a reconciliation to make sure you know what makes up the difference.
10. Contact an accountant
Year end is one of the most important times to get in touch with an accountant. If you have one he can assist you with the tasks above and help give you assurance that everything is how it should be. If you don't have an accountant, consider contacting one. Some accountants, like Virtual Accountant, will give you a free consultation and answer any questions you might have.