The end of the year is a hectic time for all people. Many are prepping for holidays, going on vacation, organizing family events and planning for the new year by setting new goals. As a small business owner, you have additional responsibilities at the end of the year that can become overwhelming during this busy season. Figuring out financial statements, filing your taxes and ensuring all bank accounts are reconciled. These are all part of the end-of-the-year tasks.
There are simple and quick things you can do to help sort out your small business accounting at the end of the year. For starters, a year-end checklist can help improve your overall process during this time and help develop your accounting system. QuickBooks, an online accounting software, is a fantastic place to start. Here is the QuickBooks checklist for your year-end.
Pull Key Financial Reports
Your first and most essential step is to ensure all financial reports are accounted for and accessible. The crucial statements to have are the following.
1. Income statement
Your income statement shows the total revenue over a specific period of time and the cost/expenses throughout the year. A line at the bottom of your income statement has your net loss or gains over this period. It is crucial to review this report to know how your company has done over the past year.
2. Balance sheet
Your balance sheet will hold all the information for your company’s assets, liabilities and shareholders’ equity. Your assets are items your company owns that have value. Liabilities are any money the company owes to others.
Finally, shareholders’ equity has two other names, capital and net worth. Your shareholders’ equity is the balance between your assets and liabilities. The shareholders’ equity will show how much your company is worth if all assets are sold and all liabilities are paid off.
3. Cash flow statement
Your cash flow statement summarizes all cash flowing in and out of the company (cash and cash equivalents CCE). Your cash flow statement (CFS) compliments your balance sheet and income statement.
Analyze Cash Flow
After ensuring all essential reports are available, you will need to analyze your cash flow. Where money is coming from and going in all areas of your business is crucial knowledge. Take a closer look at your operating, investing and financial activities.
Your cash flow from operating activities includes revenue and expenses. This will consist of regular business activities, such as selling, manufacturing, and providing services.
Cash flow from your investing activities includes assets purchased and assets sold. Your investment activities will consist of any cash put into investment-related activities.
Your cash flow from financing activities includes loans and repayments. This is your net flow of cash that is put back into your business.
Update Vendor Information
After analyzing your cash flow, it is time to update your vendor information. Organizing your vendor information will, in the long term, help your business’s success. Go through your system and remove old vendors or update current ones with the right information. Throughout the year, your vendors may have changed their contact information, including number, email address or contact name.
At this time of year, there is a perfect opportunity to negotiate deals or your contracts with your vendors. It is also a great time to reconnect with your vendors and improve your relationships with them.
Collect Outstanding Payments
This is also a great time to close any outstanding invoices. Reconciling accounts receivable will ensure payments are all collected. Accounts receivable are any customers that owe money for services your company has given. Take this time to send out reminders and collect past-due payments.
Verify Payroll and Benefits
It’s crucial to ensure there are no errors in payroll before the end of the year and to ensure benefit payments are as planned. Ensuring all payments are accounted for will allow a smooth transition into the new year.
Similarly to spring cleaning, the end of the year is a great tech cleaning time. Updating your accounting software, if applicable, will rid you of any bugs or unneeded data. Backing up your computer is another essential step in taking care of your tech. Take this time to back up contacts, important files, and any essential information from your computer. If anything happens to your computer, backing-up important files will prevent losing anything essential.
Clean Up Your Business Books with the Help of an Edmonton CPA
Closing up your books at the end of the year can be an intimidating process, but the help of the experts at Schwan & Associates and following this checklist will help immensely. Contact us today for more information and to start the process of your end-of-year.