When everything is fresh at the beginning of the year, you may find yourself still struggling to resolve the issues linked with bookkeeping from the previous year. To avoid falling victim to playing catch up in 2020, we suggest getting on top of your books now as 2019 comes to a close. However, we understand it will not be an easy thing to do and bookkeeping can be a more complex task than you think. That is exactly why we have pulled together five of our best tips for conducting effective year end bookkeeping. We hope that the information in this article will better assist you to clean up all the books before we reach not just a new year – but also a new decade – in just a few months. You can take a look at these tips and implement them accordingly. Then you can overcome stress and frustration at the end of the financial year.
1. Make sure that you keep the books up to date
It is better if you can keep the books up to date at all times, rather than continuously playing catch up. This seems obvious, we know! But other business matters definitely get in the way at times so we have helped formulate a strategy to ensure you stay on top of the books. The added bonus of this is that you will be able to reduce the amount of work that you have to do at the end of the financial year. After conducting an audit of the outstanding bookkeeping tasks, you will be able to gain a better perspective on the current status of your books. From this, you can formulate the best course of action that will get your books in order before the year is through. Rome wasn’t built in a day and we find the most efficient way of cleaning up your books is to take it one step at a time. Divide tasks into bite-sized chunks and schedule them over the coming weeks. This might look like having a daily to-do list that allocates 10-minute blocks to important tasks. That way, completing these critical tasks becomes a daily habit and the struggle to keep up with the books dissipates.
Keeping the books up to date will not just prepare you for closing the books at the end of the year. It can also provide you with a strong understanding about your business and the current financial situation. Therefore, you can make appropriate changes to the business before it’s late. You can also use this to keep the records in shape. When you have to face a CRA audit, you don’t need to worry about anything because you are ready to present all the documents tied up in a neat bow.
Keeping the books up to date through manual methods will be a challenge. That’s where you are encouraged to take a look at the automation techniques available out there to consider. You can find a large number of accounting tools available to use. You can simply go through
those tools and implement the most appropriate one. Then you can automate some of the tasks that you have to do and make your life easy with keeping the books up to date.
2. Carefully review all the financial statements
Once you are confident that your books are up to date, you can go ahead and review the financial statements. In here, you will be assessing the overall financial health of the business. You can get the assistance of a professional CPA to proceed with it. The bookkeeper will provide you with all the required financial statements, such as cash flow projections, balance sheets and profit and loss statements. You need to take your time and go through these financial statements.
The CPA can help you with reviewing all the financial statements. Then you will be provided with appropriate suggestions, which can ensure your growth in the upcoming financial year.
3. Close the books
Once you have a strong understanding about your financial health, you will be able to proceed to the next stage, where you can close your books. In other words, you can officially finish working with the existing financial structure and start focusing on the next year. Before you close the books, you are encouraged to carefully review the Chart of Accounts. You can also get the assistance of a CPA for this task. That’s because you can receive expert insights from the accounting expert.
When you close the books, you will be provided with the opportunity to get rid of clutter. In fact, you can eliminate both electronic and physical clutter. When you close the old accounts, you will also be able to clean up all the outdated accounts of customers and vendors who are not active. You can even clean your old bank accounts through this step.
4. Get ready for the new year
When you make sure that everything is up to date, you can get ready for the New Year. By this moment, you will have a clean state to start planning for the upcoming financial year. In other words, you will be in a position to make a strong plan for the next financial year. That’s because your financial statements and the analytics you derived from them have provided you with a clear picture about the existing financial structure. In addition to that, you also have a better idea about the potential budget for the next term.
You can also plan ahead for your tax payments. This can help you to stay away from a lot of frustration at the end of the year. In addition to that, you can estimate the income for each month of the year and figure out the expenditures. Along with that, you know what kind of issues may arise in the next financial year. This provides you with enough time to plan and overcome those issues.
5. Re-evaluate the entire accounting process
Last but not least, you need to go ahead and re-evaluate the overall accounting process. By doing this at the end of the year, you will be able to end up with effective results. You can sit down with your CPA and bookkeeper to re-evaluate the accounting process. For example, you can see if you are satisfied with the performance offered by accounting automation software. Along with that, you can also review and see if the processes you followed are effective or not.
Now you have a solid idea on how to clean up your books by the end of the year and start planning for the next year. Go ahead and start working on these. Then you will be able to take your business to the next level in 2020, while overcoming the hassle linked with bookkeeping.
