The end of the year is upon us, and it is time to get organized with your accounting records. If you talk to your CPA, he/she would highly recommend getting on a robust accounting system for your business.  Check out Quickbooks, Freshbooks, Less Accounting or Harvest. Leave the Excel spreadsheets alone!

This is not an exhaustive list, but an outline of what you need to
prepare for the end of the year

Enter final transactions for the year

• Review tax form (1040-Schedule C) from prior year and compare to this year’s expenses
• Enter ALL cash receipts for business expenses (taxis, business meals,subway, train)
• Reconcile all your accounts and enter any missing transactions
• Work on reducing receivables (Follow up with clients/customers to get paid)
• Write-off bad debt if necessary, but work on getting paid by customers/clients first
• Make SEP IRA or 401K contributions and donations to charity to reduce taxable income
• Make all asset depreciation entries (only applicable for equipment that you had put on a depreciation schedule)

Organize: Make Life Easier on Your CPA and Understand What Happened During The Year

• Organize receipts and statements for expenses that will be itemized on your Schedule C/1040
• Review your budget and compare actual to budget which will help develop 2008 budget
• Inquire from your CPA as to what reports, form and any other documentation are needed for tax preparation
• Ask if year-end reports should be on a cash basis or
  accrual basis
• Print out a copy of general ledger
• Back up the Quickbooks file in case of any data loss
• Send a copy of your Income Statement and Balance Sheet to your accountant at the end year to get an idea what your taxes will be in March 15 (quarterly tax payment) and/or April (personal income tax deadline).

Employee/Independent Contractors

• Order 1099-MISC forms (Independent Contractors)  and W-2 forms (Payroll Employees) early. The forms are much cheaper if buy at Staples then via Quickbooks.
• Get Independent Contractors and Employees current mailing address, SSN and the total payments made to them for the year.

1. Chris Says:
   December 3rd, 2008 at 12:22 pm

   Another accounting/invoicing option is Time59 (www.time59.com). It’s designed for solo professionals and has a 30 day free trial. If you bill by the hour for your services it’s a great tool to have.

2. Mark - Productivity501 Says:
   December 4th, 2008 at 12:14 pm

   Another thing to consider is selling off some stocks to take a loss. You can lower your taxable ordinary income by up to $3,000 this way. With the markets like they are, most people can take advantage of this.

3. Invoice Place blog » End of Year Bookkeeping Checklist Says:
   December 14th, 2008 at 2:12 am

   […] very useful end of year bookkeeping checklist is available here (written for businesses in the United States). This is useful for both independant contractors and […]

4. Chris M Says:
   January 14th, 2009 at 11:14 am

   Another invoicing option is Time59 (www.time59.com). It’s targeted at solo professionals and is a great solution if you don’t need (or want to pay for) the multi-user capability of Freshbooks (great product by the way). Bottom line: If you are solo and bill by the hour it is definitely worth a look. The first 30 days are free.