year end bookkeeping checklistThe end of the year marks the time when tasks like final bookkeeping and reconciliation have to be performed, in order to prepare for the start of a new fiscal year and get ready to file your taxes.

We know, we know, end-of-the-year bookkeeping is tedious work which is why we thought we’d come to your aid. We’ve compiled a very helpful list of tips, tricks and hints which will not only make your life easier, but, hopefully, make the whole process more…enjoyable. And if you get stuck along the way, we’re only a phone call or email away.

Gather Financial Statements

The first step is to gather the necessary financial statements. This will allow you to gain a wide angle view of your entire business activity. You do this by consulting your accounting books.

The purpose here is to generate a yearly report that encompasses your company’s financial history. From this report you will be able to generate an accurate present state which, in turn, is a solid foundation on which to forecast the company’s financial future.

Collect Past-Due Invoices

Wrapping up financial activity in the current year means collecting any invoice that is still due. You can start by sending out notifications and reminders to clients who have overdue invoices. Be careful to document every step of the process, as any overdue invoice can potentially turn into a liability in the future if you are dealing with a bad client.

After the notifications and reminders it’s time to directly contact the remaining clients with outstanding balances. To ease any burden they may be facing, be open to set up payment plans and discuss flexible terms. Any payment plan should be treated as a financial contract and thus, again, carefully documented.

Finally, for clients who still refuse to pay, consider hiring a collection agency to help with the task. Even though they charge a commission, the investment may prove worthwhile when balanced against the time and effort it saves – resources that you can allocate on more productive tasks.

Collect W-9 & W-4 Forms

There are two types of forms that you have to pay special attention to collect before wrapping the year. They are the W-9 and W-4 forms which deal specifically with outside contractors and employees.

The W-9 form is required by the IRS if you paid outside contractors (for any service provided) a sum equal or greater than $600. Have them fill out a W-9 form (it’s always good practice to solicit these from your contractors, freelancers and other collaborators at the start of your working relationship) which you will in turn use to fill out the 1099 IRS form.

For all your employees you need to have a W-4 form on file. You need to have them even for terminated employees so be careful to check you have everything necessary.

Check Your Payroll

Double check on all your payrolls. You must ensure that your early payroll tax liabilities match your quarterly payroll returns.

You will need to issue a form W-2 for your employees. Before you do that check all the payments and salaries, commissions and bonuses. Also check all the information is filled out correctly (things like names or Social Security numbers). When you’re sure everything is in tip top shape, generate the W-2 form.

Verify Your Inventory

The end of the year is the best time to check and reconcile your inventory. You must get an accurate count of the materials and supplies you have on hand if your business stores inventory.

Although this may be a significant undertaking, this task is crucial for it reveals any errors such as mismanagement, system errors or even fraud you were unaware of. Year-end inventory counts can be a significant undertaking. Correct any errors and reconcile your point-of-sale system.

Organize Your Receipts

Gone are the days in which you kept all your receipts in a shoe-box or a wooden chest locked beneath the stairs. By now, you should have a digital bookkeeping system in place that allows you to store, visualize, organize and verify your receipts. It should also allow you to analyze and run reports on the collected data.

Now is the time to verify you’ve got all the receipts entered into the system and go through everything once more to ensure you haven’t missed anything. Based on your receipts you will be able to issue you small business tax returns.

So you can imagine that any error here will carry over in the tax returns – this is bad news which you want to avoid! So, store everything digitally. Appropriately label and separate the receipts according to the kind of expense they represent. Keep copies and verify things until it’s all in tip top shape.

Reconcile Bank Accounts

One of the most important steps of the end of year bookkeeping is to get your business bank reconciliations completely up-to-date.

This means that every monthly bank statement as well as the final full-year statement is properly reconciled with the accounting records that you have.

It is always much easier to do the bank reconciliations once a month every month so that it is not such a big task at the end of the year.

If everything is in order, your bank statements should match the balance listed in your books. If they don’t match, do a little digging to find the discrepancy. You may need to adjust one of your records for the balances to be equal.

Aside from the major business bank account, when reconciling bank statements with your accounting records, do not forget to also take into account the following:

  • Savings Account
  • Petty Cash Box
  • Paypal or Stripe (or similar)
  • Credit Card Credit
  • Line Loan Account

Wrapping Up

This about covers it. Although the process may seem daunting at first, following a checklist as the one we’ve outlined above will make things easier and more streamlined. Because we are dealing with numbers and official statements and forms it will benefit you to pay attention to every little detail as one small error can diverge and grow into a big one further down the line.

Also, it’s best to keep in mind that to ease up the process for next year, some of these tasks can be performed on a month-to-month basis. This will make things much simpler for next year’s end of the year bookkeeping.

And, as always, if you need help with these tasks or want to clear things from your plate, while ensuring everything is done in a professional manner, do not hesitate to ask our help. We’re always here and more than happy to guide you through this process and even provide your business with complete bookkeeping services. Call 650-743-9293 to speak to one of our professionals.


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