Year End Accounting Checklist
Keeping financial records orderly is highly important to the success of a firm. As the calendar year is ending, accounting and finance departments works diligently to close out their books so that they can prepare to file tax returns and become audit ready. In order to avoid missing any steps and ensuring a smooth transition into the new year, we hereby present the year-end accounting checklist.
- Document accounting transactions
Document all entries in the accounting system and make year-end adjustments to account for accruals and deferrals.
- Reconcile all balance sheet accounts
Go through all of your credit and bank accounts for the business and reconcile all charges and payments. Make sure the statements correlate with your records and investigate any unexplained discrepancies.
- Review income statement accounts for misclassifications
Review expense accounts to determine if any charges should be reclassified to fixed assets, prepaid expenses or other balance sheet accounts. Also look for expenses that were charged to the wrong expense account and reclassify those expenses if necessary.
- Payroll and vendor tax forms
Be sure to include any non-standard taxable income on employee, such as the taxable portion of employer group term life insurance, taxable education reimbursements, and other types of taxable income that may not be processed through the normal payroll cycle.
Be sure to gather vendor tax ID’s and other required information before year-end if you haven’t gathered this information throughout the year. The tax form must be mailed to the IRS no later than February 28.
- Close out outstanding receivables
Make the effort to collect unpaid bills in order to close out all outstanding receivables and improve control over your cashflow.
- Create an annual budget
Start planning an annual budget by reviewing the current year’s interim financial statements. These will give insight into expenditures from the current year and will drive the financial forecast and budget for the next year.
- Become audit ready
If your financials are not GAAP compliant, then now is the time to start moving in that direction. If seeking funding or selling a business is in the near horizon, investors will require accurate financials. Working to become compliant also means, you can become audit ready.
- Assess internal controls
Review your internal processes and controls to make sure that they are working. Look for loopholes in the process that allow the potential for fraud or errors to run high.
- Evaluate process improvements
If manual data entry is slowing down the process of producing accurate financial statements on time or impeding staff performance, consider using automation to improve the accounting process.
The end of the fiscal year is a strenuous time for any business, but smaller businesses feel the pinch even more due to limited staffing and skill-set availability. But no worries as you partner with us at Ladlas Prince.