It can help improve the accuracy of your books and records, save your team time, and prevent financial loss. They keep track of accounts payable and receivable to ensure accurate financial statements. Be sure to include an “aging” column to separate “open invoices” with the number of days a bill is past due. The beginning of the month is a good time to send out overdue reminder statements to customers, clients and anyone else who owes you money. All you need is a simple statement showing your current cash position, expected cash receipts during the next week/month and expected cash payments during the next week/month.
- You could back up accounting information on your computer or smartphone or print off documents (e.g., financial statements) and store them in a secure spot.
- Human error is one of the most common challenges faced by companies during year-end accounting.
- A more streamlined firm can produce faster results and better serve its clients in the long run.
- Likewise, there are obviously more cooks in the year-end kitchen than in your month-end close process, auditors being at the top of that list.
You may need to adjust one of your records for the balances to be equal. Common mistakes to avoid during year-end accounting include failing to reconcile accounts, not making adjusting entries, and not properly categorizing expenses. It is also important to ensure that all financial transactions have been properly recorded and accounted for. Finally, it is important to review financial statements for accuracy and completeness. Preparing tax documents is also a crucial task on a year-end accounting checklist. This includes gathering and organizing all necessary documents, such as receipts and invoices, to prepare for tax season.
Pay Vendors, Sign Checks
There’s also the option of including a letter from the CEO and other details about changing markets, products, and services. This checklist points you to all the different factors you need to take into consideration when compiling your business tax return. It’s geared toward US companies but has a broad enough scope to assist businesses internationally. It’s geared to work for companies with both partnership and corporation structures.
- We suggest beginning with your financial statements and, once complete, addressing any needed reports, disclosures, and notes to your financial statements.
- Billing your clients on a consistent schedule can reduce late payments.
- Be understanding, patient, and positive when you reach out to late-paying customers.
- Stay on the lookout for arising issues and address them throughout the year to leave your year-end as worry-free as possible.
- A payroll service provider can do all this to save you time and ensure accuracy at a reasonable cost.
To make sure you get paid on time, always use an invoice template the contains the right details such as payment terms, itemized charges, and your payment address. Thankfully, there are many ways for accounting professionals to maximize the success rate of their year-end closing activities. The following checklist can help prevent the process from feeling overwhelming and ensure you have covered all the essential bases nearly any company will need for their year-end closing.
What documents should be included in the year-end accounting checklist?
Most businesses have at least 50, if not 100, very detailed items in their month-end close procedures. Therefore, it just makes sense to wrap-up the final month-end close before diving into the year-end biggies and audit items. In a way, a timeline serves as a pre-checklist to your year-end checklist, if that makes any sense, by clearly stating when everything involved is due. Reconciliations, journal entries, various draft and final reports – you need to make sure you’re checking the right boxes throughout the year.
Reconcile bank and credit card accounts
The CRA requires that all small businesses that earn more than $30,000 make HST/GST payments. But CRA rules state that you must change your HST/GST reporting period if you experience an increase in sales and taxable supplies. While you’re at it, identify trouble spots, and make adjustments to improve sales and margins. Forecasting how much cash you will need in the coming weeks and months will help you reserve enough money to pay bills and your employees and suppliers. Plus, you can make more informed business decisions about how to spend your cash. When it comes to accounts receivable, you need to check for all the past due invoices.
Think of all the times you’ve been swamped with work at the height of the tax filing or auditing season. Financial Cents was solely built to serve as practice management software for accounting firms. If a customer has any late or unpaid invoices, contact them as soon as possible (e.g., email, phone call, etc.). If your business has inventory, complete an inventory check before year-end.
If you follow these steps and rigorously analyze your financial statements, your small business will be ready to carve out its piece of the market. Understanding your accounting and reporting requirements can be daunting for any startup owner. This new business checklist will give you the framework necessary to educate yourself on accounting processes for startups and small businesses.
Simply put, the size of your organization and specific needs will determine what software fits you best. Further, we’re also including a handy checklist template you can customize for your year-end close, making sure you’re always on-point, on-track, and on-time with your year-end close and reporting. Managing your cash flow is critical, especially the first year of your business. Forecasting how much cash you will need in the coming weeks and months will help you reserve enough money to pay bills, including your employees and suppliers.
Balance Sheet Statement Preparation Checklist
Reconciling cash and receipts at the end of each day helps you discover cash shortages or overages quickly, so you can figure out where the money went and identify errors or theft. This is also essential in establishing controls and accountability in your organization, which breaks down when not tended to every day. When reaching out to customers about past due invoices, be professional.
Prepare your year-end financial statements.
A healthy cash flow is greatly vital and should be right at the top of the wave accounting 2021 for all types of businesses, especially the small ones. This would also help you in the long run by allowing you to make more informed decisions. Be sure to include an “ageing” column to separate “open invoices” with the number of days a bill is past due. Human error is one of the most common challenges faced by companies during year-end accounting.
Reconcile bank accounts and credit cards
Negative cash flow occurs when you spend more money than what you are bringing in. Moreover, the cash flow statement can show you the timing in which money comes in or goes out of your business. For example, you can see which months have a higher cash flow and the months where your business’s cash flow is struggling. Tracking your cash flow throughout the year and at year-end can also help you create a cash flow forecast and predict your future cash flow.
States that have income taxes require you to pay estimated income taxes. Your profit and loss statement (also known as an income statement), both for the current month and year to date, tells you how much you earned and how much you spent. Comparing your actual numbers to your planned numbers highlights where you may be spending too much or not enough, so that you can make changes. Keep a record of each of your suppliers that includes billing dates, amounts due and payment due date. If suppliers offer discounts for early payment, you may want to take advantage of that if you have the cash available.
This may include reviewing depreciation schedules and assessing whether any assets are impaired and need to be written down. All of these functions and more can be incorporated in to your free accounting checklist. Feel free to add or delete anything that you may need to make it complete.
However, it’s imperative for tax purposes and internal records to have an audit trail to use if you find errors when balancing the books at the end of the month. Understanding daily transactions are crucial to help you track how much cash your company has and how much it owes to others. The process of recording transactions includes logging and verifying the money going in and out of the door, as seen in the general ledger. Getting the perfect accounting checklist won’t be difficult when you have this template at your disposal.