So, 2019 is coming to a close soon. Before you start planning champagne toasts and morning-after resolutions, take time to prepare your business for the end of the year.
End-of-year preparations make tax time easier, ensure all your financial info for the current year is accurate and up to date, and let you start the next year out on the right foot. So your business keeps earning and you stress less in the year to come.
Here are five steps you can take now to prepare your business for the end of the year.
1. Organize Your Bookkeeping
Getting your bookkeeping organized for the year that’s ending will help you rest easy at night. You’ll know that all your numbers for the year add up, and that the information on your year-end financial statements is correct. That makes for a less stressful tax season.
One of the easiest ways to take care of your bookkeeping is to sign up for a remote bookkeeping solution. If you’re looking for a service provider to take care of your bookkeeping year round, and to help you skip the tax season crunch, we recommend Bench.
Double check all your transaction categories
Go back and make sure that every transaction you’ve recorded for the year is correctly categorized. If you made a categorization error in February, and then kept repeating that error, it could have a major impact by the end of the year.
For instance—let’s say you’ve been incorrectly categorizing credit card processing fees for your store as part of your overhead. That could give you a fluctuating monthly overhead expense; use it to make financial projections for the new year, and your numbers will be off. Fixing the problem now will save you trouble once the books are closed.
Balance the books
If you use the double entry method of bookkeeping, it’s essential that all your credits and debits match up. Otherwise, some accounts may actually hold less value than your books say.
You can do this at the same time you’re double checking your transaction categories. Make sure that each time an account is credited, another account is debited the same amount—and vice versa.
Reconcile Your Bank Accounts
When you reconcile your bank accounts, you make sure your bank statements match up with your books. It’s how you ensure your books reflect reality—the real, tangible cash you have to work with.
Talk to a professional
Especially if this is your first time filing taxes for your business, it’s wise to enlist the help of a CPA. They can double check your books and make sure everything adds up, so your tax filing is accurate. What’s more, they may be able to identify tax deductions you’ve overlooked. That means your business will save more money in the new year.
Close the books on Dec. 31st
On the last day of the year, close the books. That means adding up all your numbers for the year, making sure everything is balanced, and preparing year-end financial statements. You’ll use those statements to file your tax return.
If you have a bookkeeper, they’ll close the books for you. They’ll also complete other preparation steps, like checking transaction categories and balancing the books.