Some people start forgetting their expenses by the month end, and so, we can only imagine the mess that year-end accounting closures can create. Although businesses stay prepared in terms of records and reports, keeping them in order can be an issue.
So, how about having a checklist you can use while settling your year-long records?
It won’t just help you in staying prepared for the tax season but will also provide you an idea of your cash inflows and outflows. But where to start from? It’s not like having a bill or two that needs to be recorded or organized.
Don’t worry; this article is not about problems you face during the year-end accounting procedures but how to overcome them.
Start analysing your financial statements
Whether a small business or large, keeping your Financial Statements organized can prove to be a life-saver. You can compare where your business stands and how far you have come. Knowing about your cash flow, income statement, and balance sheet can also help in preparing future business plans. Therefore, the first and foremost advice any accounting expert would give is to tick off FS analysis from the financial year-end closing checklist.
Prepare an inventory account
If you are into a manufacturing or trade business, then you must also have a separate inventory account. While settling the year-end closures, you should have a proper count of inventory stock. This helps in gaining the knowledge of demand of products and allows you to stay prepared for it in the next year. Keep a separate inventory stock account and ensure you keep on filling it whenever required.
Check if there are any invoices due
If you ask one common mistake most of the businesses have made for year-end closures, you will hear about the unpaid or due invoices. While there is a proper record of cash statements, the business owners often forget about the credits and debits which can bring about a huge difference in the final output. So, if you are also looking for the reason of any discrepancy in the balance sheet, you should go check your due invoices as well.
Get your AR and AP reviewed
One of the important aspects of year-end closing procedure is to review all the past transactions that need to be paid or received. It not just allows you to have a clear picture of your revenues and expenses, but can help in tax season. It also reminds you to follow up from your clients or debtors and to settle any of your past payments.
Reconcile the Bank and Credit Card statements
Not every business deals in cash, especially when the plan is to grow and expand. Thus, many businesses rely on their business bank accounts and credit cards. The problem arises when the bank statement fails to match with the accounting records. This could prove to be a red flag while getting your company audited or while paying taxes. Therefore, it is suggested to reconcile the bank and credit card statements timely.
Get the records and receipts in order
Where everything is going digital, keeping a record of receipts is not a hard-to-do thing, but during year-end accounting closures the receipts can look jumbled up. Therefore, keeping a record of receipts and where the money has been spent can be good way to keep a track of receipts. It helps in better maintaining the records and remembers the use of them.
Prepare all the necessary documents
Year-end accounting closures are important as they allow you time to gather all the information throughout the year and prepare the required documents. Keeping a proof of transactions is never wrong. Every business owner should stay a step ahead and rather than juggling through bills, they must be prepared for the documentation.
Keep the information stored as a backup
Talking about staying a step ahead, keeping a backup can be your fourth pillar in times of crisis. No matter what software you are using or how good your experts are in keeping the financial records safe, there is nothing wrong in having a backup. The bad time doesn’t knock and so, you cannot expect to have a perfect strategy every time. Therefore, always stay stress-free with a backup data.
It’s already November, which means it’s the right time to start ticking off the crucial things from the year-end accounting checklist. Do not wait for the deadlines hang at your back to start looking for the bills from the month of August. In case you are looking for outsourced accounting services, Learn When and Why You Should Outsource Your Accounting.
Written by – Priyanka Rampal
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