Year End Checklist For Small Business

As we close out the year, it is a great time for some small business housekeeping tasks to make sure you

are ready to close out the year and also start next year strong! Read on to dive into each of the checklist steps. 


Your Small Business Year End Checklist:

1.       Reconcile All Accounts 

The #1 thing you can possibly do you for your small business bookkeeping and taxes is reconcile all your accounts. A reconciled bookkeeping file that can be confirmed with a bank statement does many positive things for your business. 

A truly reconciled file tells your bookkeeper and tax preparer that all business transactions are recorded in the file. From there, you just need to make sure everything is in the right place (you guessed it, another checklist item!) 

Make sure to analyze all unreconciled transactions that have not cleared on a bank statement. Are these double recorded? Was a check not cashed? These are all clean up items that need to happen at year end. 

Having your CPA handle these tasks will prove to be very costly. Also, if you hand your CPA a bookkeeping file that is not reconciled, you can almost count on a tax extension being filed. 

If you have not already invested in a qualified bookkeeper, I highly recommend that you do. Not only will this save you time throughout the year but you can also guarantee these financial tasks will be completed correctly every year. 

Schedule your free bookkeeper consultation here! 

Not sure which accounts should be reconciled? Use this list as a guide. 

o   Bank accounts (checking and savings)

o   Credit card accounts

o   Loan accounts

o   Lines of credit

o   Payroll liabilities

o   Asset accounts 

2.      Analyze Your Financial Statements 

The financial statements are the lifeline for your business. They tell you where your business stands financially. Statements let you see the past and current finances so you can forecast the financial future and plan for the year ahead. 

Your financial statements can be accessed in your accounting software. It is best to compile these reports after you have reconciled your accounts and cleaned up your unreconciled transactions. Here are a few financial statements to review: 

o   Income Statement 

This report, also known as the profit and loss (P&L) statement, summarizes your revenue and expenses. The income statement lists all the money you gained and lost throughout the year. Compare this year’s income statement to last year to analyze the differences in revenue and expenses. 

o   Balance Sheet 

The balance sheet shows your assets, liabilities, and equity. This report tracks your company’s financial progress.

Here are the difference aspects of your balance sheet:

§  Assets: What you own

§  Liabilities: What you owe

§  Equity: The money left over after you pay expenses 

Use your balance sheet at year-end to verify your account balances. Your liability account balances should match the year end balances listed on account statements. If there are discrepancies, make sure you deep dive to find the accounting mistake and fix it. 

o   Statement of Cash Flows 

This is my favorite statement! Typically, the most overlooked this statement lists your business’s incoming and outgoing cash. Cash is king when it comes to the health of your business. Without a positive cash flow, your business can be at risk.

Tracking your cash flow throughout the year can help you create a cash flow forecast and predict future cash flow. 

3.      Gather and Organize Receipts 

If you are still storing your business receipts in a shoebox, it’s time to rethink the way you are organizing these business receipts and tidy up for the new year. 

Disorganized receipts puts your business at risk of sloppy and inaccurate books. Messy records also increases your chances of making errors on your tax return, which causes more issues in the future. 

To get your business receipts organized, you can:

         Sort receipts by type of expense

         Use folders and labels

         Organize receipts chronologically

         Store receipts digitally on your computer

         Invest in a receipt capture program, such as Hubdoc or Dext. 

Our recommendation at Vegter Bookkeeping, upload and attach your receipts directly to the transactions in your accounting software to efficiently track them and have all data on hand if ever needed for an audit. 

4.      Prep and Send 1099 Forms 

Having a 1099 independent contractor mess each January is something every business owner should want to avoid. You already have enough on your plate in January and the last thing you need is another deadline. Kick off the new year focusing on sales and growth rather than 1099 compliance and taxes by following these tips: 

         Stay on top of 1099’s throughout the year rather than waiting until the deadline is looming.

         Request a W-9 from your vendors before you pay the invoice.

         Attach a copy of the W-9 into the vendor profile in your accounting software and be sure to have your software tracking for 1099 payments (if applicable). 

5.      Update Employee Information 

Review your employee and contractor information at the end of the year to ensure the information is up to date, including their names, SSN’s, and addresses. Also review any former employees that worked for you throughout the year. Their information will also need to be updated for W-2’s and 1099-MISC’s.

 There can be penalties associated with misfiled W-2 and 1099-MISC, so it is imperative to make sure the data is up to date and accurate. 

6.      Review Accounts Payable and Accounts Receivable 

It is always recommended to maintain clean accounts payable and receivable. Year-end is a great time to complete a review of these accounts. 

Run your aging reports on both accounts receivable and payable may reveal some problems or errors. Ensure these get cleaned up before passing your records off for tax preparation.

Common accounts receivable errors are not offsetting credits against old invoices. Also, try to collect outstanding receivable balances as soon as possible and explore the benefits of writing off bad debt that you will never collect. 

Reviewing aged payables may reveal some old inaccurate balances. Ensure payments were properly applied to bills or follow up with vendors that are still showing an outstanding balance. 

The best place to start when cleaning up your end-of-year accounts is with source documents like receipts and invoices. Whether you have physical files or moved to paperless, you will want to make sure all your records are accounted for. 

7.      Take Physical Inventory (if necessary) 

If your business has inventory, an inventory check must be completed. Match your inventory totals to your balance sheet. If you find discrepancies between the balance sheet and your physical count, make the necessary adjustments. 

Accounting for inventory during your year-end process can also help you know how much you spent on inventory throughout the year and its value. This allows for better planning for next year’s inventory. 

8.      Set Financial Goals For Next Year 

After completing your year end bookkeeping tasks and reviewing your financial statements, it’s the best time to focus on goals for the new year! Here are some tips for goal setting: 

o   Set up Goals using the SMART goals method: 

If you’ve never heard of or used the SMART Goals method, it’s a great way to develop your goals so you are more likely to understand and achieve them. The five main components to this method: Specific, Measurable, Achievable, Realistic, Time-bound. 

o   Determine your “Why”: 

Nobody will act on a goal if they don’t first understand the reason behind why the goal was set. Ask yourself why you are setting these goals. When your goals have a personal meaning, you will be more likely to see them through and stay motivated throughout the process. Check in with yourself so you can stay on track and achieve the goals if you hold yourself to it. 

o   Hold yourself accountable: 

This is probably the hardest step of the entire process. When you get off track, take a few minutes to evaluate the situation and hold yourself accountable for the steps taken off track. Do not punish yourself, but rather evaluate and decide the best course of action to get back on track. 

o   Celebrate your achievements: 

Unwind and celebrate your achievements in the ways you best see fit. Reap the rewards of achieving your goals but also take time to celebrate yourself for the hard work and dedication it took to achieve your goals. It can be a great idea to identify the reward when you set the goal. This can help you to stay on track when you are moving towards both the achievement of a goal and the reward at the end. 

Want help with setting your goals or staying accountable? Let’s chat! The team at Vegter Financial will help you put action steps into place to achieve your goals and help to hold you accountable while you travel to achieve your dream financial destination!

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