End-of-year Accounting

The end of the year presents some unique opportunities for small-business owners, along with some challenges. Reviewing operations in the past year and planning for the coming year are important steps that can easily be overlooked by busy owners. There are also a variety of accounting-related tasks that must be done to keep your business moving forward. Here are a few tips to keep your business on track.

Tax Preparation

Taking some extra time now to make sure all of your tax documentation is organized will save frustrations and time when you are ready to meet with your accountant. Call your accountant or tax preparer to ask for guidance for your situation. Specifically, be sure to

  • Make note of any major purchases during the year that are considered fixed assets. It's a good idea to keep a running list of these purchases throughout the year to make sure nothing is missed.
  • Doublecheck to ensure all of the information is available for 1099s. These must be distributed no later than January 31.
  • Begin gathering the information needed for your business (and personal) tax return.
  • Make sure all payroll information is updated so employee W-2 statements can be issued before January 31. Be sure to check with your tax preparer to determine if taxable benefits should be added to your employees' W-2s.

Employee Benefits 

Employee benefits should be reviewed at least annually. Check coverage levels and exclusions, as well as cost. With all the changes with the Affordable Care Act, reviewing health insurance coverage is essential.

Insurance and Vendor Review

Be sure to review your business insurance coverage at least annually. The marketplace is ever changing and you need to be sure your coverage is still adequate. Be sure to consider general liability, Workers Compensation, vehicle and property, and any coverage needed specific to your industry.

Reviewing all of your vendor partnerships annually is a good practice. Who are you doing the most business with and are those relationships still profitable and dependable? Relationships with accountants, insurance providers, payroll providers, bankers and other consultants are an essential part of any business and must be maintained. 

Close Out Your Year

While a good accounting system includes monthly reconciliations, closing out the year is more involved. In addition to your normal monthly maintenance, be sure to:

  • Complete a year-end physical inventory, if appropriate.
  • Review your cash account reconciliations for older outstanding items.
  • Prepare your balance sheet, income statement and cash-flow statement for the year.

Plan for the Coming Year

Planning is a step often overlooked by busy owners. However, it is an essential part of a healthy, growing business. First, review your business performance over the past year, as well as any goals. How did your business perform overall? Be sure to celebrate successes with your employees. Then, look to the coming year.

  • Work with your employees to set goals for the coming year. Each employee brings a unique viewpoint to the goals. By combining everyone's vision, you will have a clearer, stronger set of goals that everyone supports. After the overall goals are established, create action steps to reach each goal. 
  • Build your budget for the coming year. Be sure to include any expected tax payments and expenditures related to the goals.  
  • Consider setting up reviews for the coming year for both the budget and goals.

By following set procedures for tracking business performance, you can keep your business running smoothly and on track.