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10 Steps to Prepare Your Books for Year-End
Thomas Gogarty | Aug 09 2024 13:00
Closing out the year can be a challenging experience for business owners. The good news is that you can avoid some of this stress and potentially save money by following these 10 steps before year-end.
1. Ensure Bank Accounts Are Current
Reconciling your bank accounts regularly ensures you stay on top of your cash flow and keeps your records accurate. This helps prevent missing potential deductions and maintains complete financial records.
2. Collect Open Receivables
Review any outstanding receivables. If certain accounts are unlikely to be collected, consider writing them off. This cleans up your receivables and ensures you aren't paying taxes on income you haven't received.
3. Identify Old or Obsolete Inventory
Assess your inventory for any items that are no longer sellable. Writing off these items can reduce storage and insurance costs and clean up your inventory records.
4. Dispose of Unused Assets
Check your property, plant, and equipment list for items you no longer own or have disposed of. This review can reveal additional write-offs or income from sales.
5. Include All Unpaid Bills
Scan your accounts payable to ensure all unpaid bills are included. Missing invoices could mean missed tax deductions.
6. Account for All Payroll Benefits
Verify that all bonuses, retirement contributions, and taxable fringe benefits are included in your payroll. This avoids the need to amend tax filings and ensures accurate records.
7. Review General Ledger Accounts for Errors
Look through your general ledger for any posting errors. Correcting these errors ensures all expenses are accounted for and potential deductions are not overlooked.
8. Record All Debt Accurately
Make sure any loans or financed purchases are accurately reflected in your books. Check payment allocations to ensure all deductible interest payments are included.
9. Log All Credit Card Purchases
Record all credit card transactions in your general ledger to avoid missing deductions. This is particularly important for online purchases.
10. Consider Year-End Purchases
If you expect a profit, consider making additional purchases, such as equipment or supplies, before year-end to offset your taxable income.
Taking these steps to prepare your books and records for year-end can save you time and stress. Schedule a consultation with us if you need tax planning help or have other tax-related questions.
