The end of the year is upon us, and it is time to get organized with your accounting records. If you have not done so already, I would highly recommend getting on a robust accounting system for your business. Check out Outright, Freshbooks, Less Accounting or whatever works best for you.
It’s not an exhaustive list but a good guide to ensure that you are ready for the end the year and tax time. Some of the tips I got from the National Association of Certified Public Bookkeepers (NACPB).
- Enter final transactions for the year. Pay bills, people and other 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 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
- Collect all bank statements and business credit card statements for the year.
- Make sure you have check register.
- Inquire from your CPA as to what reports, form and any other documentation are needed.
- Ask if year-end reports should be on a cash basis or accrual basis
- Back up the accounting 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) and/or April 15 (personal income tax deadline).
- 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 current mailing address and SSN.
- Calculate the total payments made to them for the year.
- You can file 1099s online. The deadline for when are sent to independent contractors is January 31.