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Salt Lake City Bookkeeping Blog

'Must Do Now' Year-end Bookkeeping Checklist

Posted by Matt Roberge on Oct 30, 2013 7:00:00 AM

As we get closer and closer to year-end most businesses will begin thinking about taxes.  One of the most hated words in the business world... taxes.  By the time year-end passes and you actually start to think about your bookkeeping and taxes you are too late.  You need to attend to your bookkeeping before year-end and do some tax planning.  Updating your bookkeeping and reviewing it prior to year-end is very important as you can actually do something about your tax situation before the turn of the calendar.  Here is a must do now checklist for your year-end bookkeeping.

#1 Reconcile The Books

The best thing you can possibly do for your bookkeeping and taxes is to reconcile QuickBooks.  A reconciled QuickBooks file that can be confirmed with a bank statement does a lot of positive things for your business.  A truly reconciled file tells your bookkeeper and tax preparer that everything is in the file; now we just need to make sure everything is in the right spot.  Having your CPA handle tasks that should be done by your bookkeeper will be very costly.  Also, if you hand your CPA a QuickBooks file that is not reconciled you are almost asking for a tax extension to be filed.  Make sure to reconcile all accounts, not just bank accounts.  It is important to reconcile credit cards, loans, lines of credit and payroll liabilities in addition to your bank accounts.  

#2 Asset Review

One thing that you should do is to take a peek through the details of your asset accounts.  You want to be looking for any glaring errors that you mistakenly booked to an asset account.  If you are staring at a $30.69 charge in a fixed asset 'Equipment' account you most likely need to reclassify that small charge.  Look for any blatant errors and reclassify them to the correct account.  Also, if you come across a questionable transaction move it to the ask my accountant account for an easy review with your CPA.

#3 Ask My Accountant Review

You should always use the QuickBooks ask my accountant account for any questionable transactions.  If you come across a transaction that you are not sure of what it is when you are reconciling code it to ask my accountant.  Once you have had time to do some research or ask the powers that be what the charge is related to you can code it appropriately.  This will at least allow you to keep the books reconciled, which is the most important bookkeeping task on this list.  Using ask my accountant keeps all of your questions organized in one spot for easy review with your CPA before year-end.

#4 Clean Up AR and AP

Maintaining clean accounts payable and receivable is something we always recommend.  However, before year-end is a great time for a once over tune up of your AR and AP.  Running your aging reports on both accounts receivable and payable may reveal some problems or maybe just some errors.  Common accounts receivable errors I see are not offsetting credits against old invoices.  You want to try and collect your outstanding receivables balances before year-end and possibly write of the bad debt that you will never collect.  Looking over aged payables may reveal some old inaccurate balances.  Do some research on any suspicious balances and request statements from those vendors.  Going into year-end with a firm handle on payables and receivables will definitely benefit you.  

#5 1099's

Nothing is more frustrating and stressful than having a 1099 independent contractor mess in January.  You already have enough on your plate in January and the last thing you need is another deadline.  You want to be focusing on sales and growth to start the new year not 1099 compliance and taxes.  We tell our clients to stay on top of 1099's throughout the year rather than waiting until the deadline is looming.  Most businesses are aware that they should request a W-9 form from their vendors, but very few actually follow through and complete the task.  It is a lot easier to get a W-9 filled out from a vendor before you pay them, rather than 6 months down the road after the contract work has been completed.  I always tell clients to let their contractors know they can get paid as soon as they submit a filled out W-9 form; works every time.  Before year-end do a review of your contractors and make sure to input the 1099 information in QuickBooks.  Come January rather than scrambling to gather the information you will be hitting print and mailing 1099 forms out without any issues or stress.  

#6 CPA Review Before Year-end

You have followed through the checklist thus far and all before year-end...good for you.  However, don't stop reading because this is by far the most important step.  You need to do a year-end tax review with your CPA to get an estimate on your tax liability.  Why would you go through all of this trouble of getting ready for your taxes without actually reviewing your estimated tax liability? So many small business owners skip this step and I scold them over it.  I think many owners dislike taxes so much that they are actually afraid to see what their potential tax liability is.  You need to review your taxes with your CPA prior to year-end for two very important reasons. 

1.  There are a lot more tax advantageous moves you can make prior to year-end as opposed to waiting until the calendar turns to a new tax year.

2.  Iif you are going to owe taxes wouldn't you rather have 4 months' notice rather than just a few weeks? Most people hate getting hit with any unexpected bills and taxes should be treated no differently.  If you do owe at least you will be prepared and you will not be surprised by your tax liability.  

Year-end is coming and it is time to polish up on your bookkeeping.  Follow these simple steps and bring your CPA the cleanest set of books you ever had.  One last thing, don't forget that tax review before year end...it's just that important.

Avoid Year-End Bookkeeping

Topics: Year End Accounting, Small Business Bookkeeping, Tax Tips, Year End Bookkeeping