The end of the year is coming quickly, and there’s no better time than now to get organized. Preparing financially for year-end will be a massive advantage for your business and leave you feeling ahead of the game rather than frazzled.
You could leave it until the beginning of next year and throw everything together for your accountant when they need it on the fly and hope for the best, but that usually ends in disaster and you’ll thank yourself later for getting everything ready now.
Your year-end process will go much smoother and be more accurate with a plan. So in this post, we’ll lay out a year-end financial checklist so you can have everything ready in preparation for your stress-free year-end.
Your Year-End Financial Checklist
Reconcile Your Accounts
First things first, reconcile your accounts. Everything that comes after – reviewing financial statements, reviewing goals, and filing your income taxes relies on accurate numbers; therefore, doing this first will help everything else run smoothly.
Leaving all your reconciling for year-end becomes a significant task for you at the end of the year. But if you haven’t been reconciling your accounts throughout the year, now is the time to start. And a great goal for next year could be to keep up to date monthly, or at the very least quarterly.
Gather all bank, credit card, loan statements, and any missing receipts or invoices. Now reconcile all transactions to your statements, confirming that all transactions are entered, and nothing is missed.
Gather Your Financial Documents
At the end of every year, you must gather and review your financial statement reports. Your financial statements give you a glimpse into where your business stands financially. They clarify what happened in your business this past year and help you make adjustments and plan for the future.
The financial statements you need for year-end are:
- Balance sheet
Your balance sheet gives a snapshot at year-end of what your company owns (assets) and what it owes (liabilities) and also shows your equity in the company.
- Income statement
Your income or profit and loss statement summarize your annual revenue and expenses. It clearly shows you if you are earning more than you’re spending or vice-versa. You will be able to see if your company netted a profit or loss at the end of the year by looking at the difference between the two. Analyzing the significant differences between revenue and expenses from year to year helps spot any issues and plan for next year’s budget.
- Cash flow statement
Your cash flow statement lists incoming and outgoing cash.
It is broken down into three sections – cash flow from operations, investing, and financing – so you can see where your money is coming from and where it is going.
Remember that your financial statements are only as accurate as your bookkeeping, so your books must be cleaned up first if they aren’t already.
Review Your Goals
As we near the end of the year, schedule time to review your goals.
Find out which goals you met or are on track to achieve and why. On the flip side, also look at the goals you won’t accomplish this year and why not.
It is important to not only celebrate your wins but use the places you fell short of to adjust and improve for the future.
Use your reflection on this year’s goals to create new goals for next year.
Check-In on Your Taxes and Have Documents Ready
Check-in on your taxes by ensuring you are still on track with setting aside the most accurate estimate to cover your tax expense.
If you aren’t setting aside funds for taxes or paying quarterly, you could be hit with a hefty bill in the new year that would burden your business.
Accurately calculating this estimate requires accurately recording your income and expenses for the year, which is the benefit of keeping up with your bookkeeping throughout the year and reconciling your accounts.
This is also a great time to start gathering your tax documents, including your financial statements, to have ready for your accountant early. Tax season in the first few months of the new year is hectic, and if you delay, your accountant may be unable to accommodate and get your return done within the deadline needing to file an extension.
Now is also a great time to reach out and find out what documents are needed and when your accountant expects them. This will prevent you from scrambling last minute and possibly missing the deadline.
Reach Out to Your Accountant
Getting organized now will allow you to prepare for year-end without throwing together inaccurate information to meet the tax deadline. The end of the year can be a busy time, so getting a head start on preparing your financial information is always better.
At Leichter Accounting Services, we will help you get organized and start preparing your finances before year-end. We specialize in bookkeeping, accounting, and tax service for small businesses with friendly, professional support as well as providing financial direction to our clients.
Contact us today to learn more about how we can help organize your finances for year-end.