As the end of the calendar year approaches, we want to remind you about some of the crucial bookkeeping and accounting tasks you should be planning to complete. Even if your accounting year end is not December 31, consider taking a few moments to review these tips for ensuring financial compliance, accurate records, and a smooth transition into the new year. Here’s what we think are some of the most essential tasks you need to undertake:
1. Review Your Financial Statements: Start by thoroughly reviewing your financial statements, including the balance sheet, income statement, and cash flow statement. This will help you identify any discrepancies and provide insight into your financial health.
2. Reconcile Your Accounts: Ensure you (or your bookkeeper) has reconciled all your bank and credit card accounts. Look for any missing, duplicate or stale-dated transactions and rectify them.
3. Update Fixed Assets: Review your fixed asset listing (i.e. the big stuff like cars, computers, equipment, machinery) and make sure it reflects any new assets acquired during the year. This is required for accurate depreciation calculations. Also make sure you have easily accessible copies of invoices and receipts for new assets because your accountant may want to review them.
4. Inventory Management: For businesses with inventory, conducting a physical inventory count is crucial. This ensures that your balance sheet accurately reflects the value of your inventory and that your cost of goods for the year have not been over- or understated.
5. Accounts Receivable and Accounts Payable: Review your outstanding receivables and follow up on overdue invoices. Make a list of any that you think may be uncollectible. Check that your accounts payable are current and look into any old, unpaid bills.
6. Tax Compliance: Make sure all your tax obligations are up to date. This includes income tax, sales tax, and payroll tax. Also check if you should be registered for other government programs like (in Ontario) WSIB and Employer Health Tax. Determine what information is required to deduct vehicle and home office expenses and make sure you have it ready. Consult with a professional to make sure you are in compliance and also taking advantage of all available deductions.
7. Payroll Expenses and Benefits: Review your payroll expenses and reconcile employee benefits, such as RRSP contributions and health benefits. Ensure your payroll records match those of your service providers.
10. Meet with Your Bookkeeper and Accountant: Schedule a meeting with your bookkeeper to review the preliminary year-end financials and address any questions you may have. Make sure you know the deadline for submitting documents to your accountant for financial statement and tax preparation, and set a date to meet with them once they are completed.
11. Budget for the Upcoming Year: Consider using your current year financials to create a budget for the upcoming year. Are there any costs that you can eliminate or types of revenue you want to work on increasing? A good budget can help you set financial goals and allocate resources more efficiently.
12. Data Backup and Storage: Safeguard your records by ensuring they are securely backed up and stored. If you are using QuickBooks Online, consider subscribing to Rewind for an automated backup solution. We also recommend keeping digital copies of your bookkeeping and accounting documents by using software like Dext or Hubdoc.
13. Document Any Changes: If there have been any significant changes in your financial situation during the year, make sure to document these changes and share them with your bookkeeper and accountant.
By completing these essential tasks, you can prepare for your year-end accounting with confidence, knowing that your financial records are accurate, your tax obligations are met, and your finances are on solid footing as you head into the new year. If you have any questions, please get in touch so we can help you navigate these steps.
