1. (Catch-up) Bookkeeping
Who needs to catch-up on bookkeeping…you have this all taken care of, right? In our experience, this isn’t always the case and that’s ok! But, the sooner you get this taken care of the better. If you wait too long, you may have a hard time finding a bookkeeper or CPA that will have availability to take on the workload and you don’t want to be stuck when its tax time.
Bookkeeping is an important tool in business and not just for your taxes. Having accurate financials every month will show you how your business is doing so you can budget and make adjustments to help your bottom line. If you do not have monthly reports on your business, how do you know if your business is doing well? We sometimes hear business owners are using bank statements as their measure of how their business is doing but this is not a full picture of your business. When you have a good bookkeeper your financials will show you where your money is going and what marketing strategies are working. When financials are classified in efficient categories it will be easier to locate efficiencies that could save you money –like reoccurring subscription services that may not be needed anymore or are redundant.
2. Secure a CPA
As mentioned before, if you wait until January, it will be hard to find a CPA that has availability for a new client. Don’t fret! If you have a bookkeeper that can provide tax-ready financials a CPA will have more flexibility to add you to their schedule because your financials are already categorized and will not require a huge amount of time to complete AND this also means your bill for tax prep will be lower!
3. Review your Reports
As the owner of your business, the financials are ultimately your responsibility. Your CPA will assume that your bookkeeper has reviewed your accounts and likewise, your bookkeeper may assume that a CPA will review and make corrections where needed. Familiarize yourself with these Reports: P&L Detail (make sure the expenses make sense where they are categorized) and Balance Sheet (make sure expenses are not hitting here); and make sure all accounts are actually balanced and reconciled. Did you know that transactions that are just hanging out in the account ledger and unreconciled are still showing on your reports? That’s right! So you need to find if there are any transactions that do not reconcile to your account, why they are there (maybe they are a duplicate transaction or synching error) and delete them.
4. Inventory as of 12/31
Merchandise and products you’ve purchased for resale are an asset until you’ve sold the item. At year end you need an accurate inventory of unsold goods and this will show as an asset on the Balance Sheet. You’ll need to account for this as of 12/31 so don’t be caught off guard at tax time and make plans now. If you have to take a count a few days before the end of the year, no problem. Just take a look at your sales the last few days after your inventory count and make adjustments.
5. Gather 1099 and W9 Info
Verify that you have current addresses for all employees. Maybe an employee moved but didn’t say anything because they didn’t need to update their direct deposit or maybe they forgot…. Don’t wait till mid-January to gather employee and subcontractor information to send out W2s and 1099s. You do not want to be scrambling to get these post-marked by the January 31 deadline. Also, good rule of thumb is to require subcontractors to complete a W9 immediately when starting. Do not wait until they earn $600… some subcontractors will not contact you back.
6. Budget and Goal Set for New Year
Now that you’ve got your bookkeeping caught up you’ll be able to set your goals for next year. What programs really thrived this year? What advertising brought in the most new clients? Which months were slower? Did you have any irregular expenses this year? When you have your plan, set up a budget vs. actual report in QuickBooks to help you gauge where you are. It takes about 10 minutes to set up and it can help you stay on track.