Is your accounting paperwork in perfect order or do you still have a huge list of tasks that can cost you significant money? A year-end bookkeeping checklist is your key to a trouble free year-end closing process, and a smooth transition into the new year.
Every accountant who serves multiple clients that is largely in charge of managing the books internally can significantly benefit from a clear year-end checklist. A financial small business trends survey revealed that almost 32% ranked cash flow as a significant problem. A comprehensive checklist helps eliminate such challenges and saves time and money on possible errors, as well as to prepare efficiently for the upcoming tax season.
What is a Year-End Bookkeeping Checklist?
A checklist often contains a detailed list of all daily business activities, and the year-end checklist will offer you an opportunity to confirm compliance with all the activities before the close of the year. Some of the duties of accounting solutions include activities like statement clear, analysis and tax preparation. You can now concur that besides ascertaining the correctness of your financial records, this checklist also averts noncompliance of the law, as well as prepares your business for the new fiscal year.
8 Key Steps for an Effective Year-End Bookkeeping Checklist
1. Reconcile Bank Accounts
The annual process of reconciling business checkbooks is one of the initial ones that should be completed at the end of the year. Why? Reconciliation helps check that your records tally with what your bank records show, this is very important for your accounts.
Also Read: Consider adopting the right software for accounting firms to integrate your workflows and ensure efficient accounting practices.
Here’s what you should do:
- Compare your internal ledger with bank statements.
- Look for any discrepancies that might result in losses through omissions, fraud or other issues not recorded.
- Pay all credit card bills and compare the expenses of the business and if there is any discrepancy.
2. Review Accounts Receivable and Payable
The primary step before closing would be checking the accuracy of your accounts receivable, money which you are owed, as well as accounts payable, referring to the money which you owe to others.
What to check:
- Pay special attention to any money that has not been received yet.
Also Read: If you are managing client invoices, quotation software may be of great help in managing this section accurately.
- Confirm all bills have been recorded properly.
- Consider writing off any bad debts that are unlikely to be collected.
3. Verify Payroll and Employee Expenses
Payroll is a critical part of checklist. You need to make sure that all wages, bonuses, taxes, and benefits are properly recorded. To enhance collaboration, using integrated email accounting practice management software can ensure all communication stays organized.
Action items:
- Confirm that payroll taxes have been withheld and paid.
- Check that employee benefits, such as health insurance and retirement contributions, are accurate.
- Review and adjust any accrued payroll expenses.
4. Assess Inventory and Adjust for Valuation
In case your enterprise is engaged in sales of stocks, the best time to rethink it and change something is the end of the year. Failure to count inventories correctly, or failure to value them properly means that the firm will post wrong figures on its balance sheet that can determine your taxes and future planning.
Steps to take:
- Perform a physical inventory count.
- Adjust discrepancies between the actual stock and your records.
- Reassess the value of your inventory using your chosen method (e.g., FIFO or LIFO).
5. Prepare for Tax Season
After the close of the year, a tax season does approach and preparing for this is an important year end activity you should consider. Recent documents such as receipts, invoices or canceled checks must be carefully sorted in preparation for its tax purposes as well as to check if every possible deduction is being claimed.
What you need to do:
- Review your deductible expenses and categorize them for tax filing.
- Gather all necessary documents, such as 1099s, W-2s, and receipts for deductions.
- Work with your tax advisor to ensure all tax strategies are in place.
6. Review Financial Statements for Accuracy
It is wise to briefly go over your financial statements; balance sheet, income statement, and the cash flow statement before closing the books for the year.
Review these key areas:
- Double-check the accuracy of entries in your income statement.
- Ensure your balance sheet correctly reflects assets, liabilities, and equity.
- Review cash flow for consistency with your operating activities.
7. Close the Books
By this, all the tasks are done, meaning it is now time to close your books for the year. Another step in finalizing it, this secures your financial records, and further changes cannot be made into it. By closing the books, you create a solid foundation for next year’s financials.
What to do:
- Lock all accounting periods to prevent any post-close adjustments.
- Verify that all transactions for the year have been properly recorded.
- Backup and archive all records for future reference and audits.
8. Plan for the Upcoming Year
When you have finished the detailed check-list for your year-end bookkeeping, it is high time to turn to the following year. This step involves picking ideal financial objectives, establishing a new or revised financial plan as well as having strategies for change of tax laws or regulations.
What to consider:
- Set new financial goals based on last year’s performance.
- Create a budget and cash flow forecast for the upcoming year.
- Adjust business strategies and financial operations as needed.
A little planning keeps your business on schedule and effectively calibrates to the new financial year. In the same manner, structuring an efficient accounting work flow process ensures that you do not get to stress yourself with a long checklist of things to do in preparing your year end accounts.
Also Read: Check out our guide for pricing bookkeeping services to adjust your pricing for the next fiscal year.
How Cone's Practice Management Software Helps with Year-End Bookkeeping
Cone's Practice Management Software is designed to optimize workflows, enhance team collaboration, and ensure data security, all of which are crucial when closing your books for the year. Here’s how Cone’s features can help you:
Best Features for Year-End Bookkeeping:
- Cone allows you to manage all tasks, deadlines, and project statuses in one centralized place for your entire team, ensuring smooth tracking of year-end responsibilities.
- The software offers secure client data storage, keeping all financial information organized and protected for audits and year-end reviews.
- With seamless collaboration, Cone ensures smooth communication between in-house teams and remote accountants, which is critical for efficient year-end bookkeeping.
- You can customize workflows within Cone to suit your bookkeeping processes, allowing you to meet your specific year-end financial requirements.
Also Read: Investing in custom apps for accounting firms allows for tailored workflows that perfectly align with your unique year-end bookkeeping needs.
- Cone's comprehensive reporting features allow you to generate detailed progress reports on tasks and financial summaries, helping ensure nothing is overlooked during year-end.
- The automated billing and payment system in Cone simplifies invoicing and payment collection, reducing administrative work and improving cash flow during the year-end period.
Key Features To Consider:
- Centralized task management
- Secure client data storage
- Streamlined communication
- Customizable workflows
- Comprehensive reporting
- Automated billing and payments
- Secure data protection
- Integrated virtual team support
Pricing:
- Starter: $5 (annual billing) or $7 (monthly billing) per user/month
- Essentials: $10 (annual billing) or $13 (monthly billing) per user/month
- Growth: $15 (annual billing) or $20 (monthly billing) per user/month
Get on Closing Up Now!
It is crucial for many organizations to have a checklist to work on during the year-end bookkeeping preparation since having a checklist allows for focusing on the most important tasks of accountants. When you are able to finish and complete this basic work, it helps you to provide correct records of financial accounts, minimize mistakes and prevent work hold-ups. Cone's Practice Management Software is a great tool to streamline this process, offering secure data storage, task management, and seamless collaboration. Start your free trial with Cone today!