With fall already in full swing, the end of 2023 is just around the corner. For business owners, it’s time to think about year-end reporting requirements and tax planning. These processes tend to give many owners and managers anxiety, but if you plan and organize your documents and create a solid plan to tackle all of these tasks, ending the year won’t be nearly as anxiety-inducing.
The following tasks are things you should be thinking about as the end of the year draws closer.
- Financial reporting: Running financial reports is critical at the end of the year. However, these reports rely on accurate input throughout the year. If you haven’t been keeping on entering data, now is the time to get caught up on this task. With accurate data, your end-of-year reports are much easier to generate, and you can ensure that you won’t be spending hours – or days – tracking down errors during reconciliation. End-of-year financial reports can often be exported from the accounting software you use. The ones most businesses want to generate at the end of the year include an income statement (or profit and loss statement), a balance sheet, and a cash flow statement. These reports give you a snapshot of where your company stands at the end of the year and help you plan for the upcoming year.
- Review your cash flow statements: Cash flow statements tell you how you have been spending money throughout the year. Reviewing this document helps you identify your cash flow trends throughout the year and plan better for the next year. This type of planning can prevent issues with cash flow throughout the upcoming year.
- Review vendor information: As a business owner, you likely work with many partners and third-party vendors. You may even have to provide some of them with end-of-year documentation. This process goes much more smoothly if you have current and accurate contact information. Review all contact information at the end of the year, including their phone numbers, email addresses, points of contact, and physical addresses. You can also remove inactive vendors or those you don’t plan to work with in the future, keeping your system’s data clean and neat. At this time, you may also want to review your contracts with vendors and see if any of them need to be updated for the upcoming year. If so, this is a great time to negotiate better contract terms.
- Reconcile accounts receivable: Accounts receivable reference the amount your customers still owe you for goods or services. It is the list of unpaid invoices that you have issued. Calculating your outstanding invoices is a great way to tell you how efficiently you collect revenue. If this process needs work, focus on developing better policies to introduce at the start of the new year. It’s also a good idea to make every effort to collect past-due payments before the end of the year. This process boosts your cash flow and lets you start the new year fresh.
- Perform additional reconciliations: In addition to reconciling payroll, you may also want to ensure all financial documents can be reconciled. This process includes recording all journal entries relevant to the reconciliations and ensuring that the reconciliations match the general ledger information, as well as your account balances and bank statements. Look for discrepancies during this process and fix any errors you catch.
- Review assets and inventory: You will want to look at your current assets and accounts to ensure that they reflect the current value; this includes updating your inventory. If you have to make journal adjustments, such as depreciation expenses and recording new fixed assets, now is the right time to do so.
- Review payroll and benefits information: At the end of the year, you also want to ensure that any issues or corrections required for payroll are made. You likely must also update your employee’s enrollments for the upcoming year.
- Prepare a year-end trial balance: A trial balance is an accounting statement often prepared after posting multiple entries. It totals all debits and credits to help you identify any recording errors.
As you can see, preparing your business accounting statements at the end of the year can be a complex process. Therefore, it’s also a good time to consult with your tax professional or CPA to help you plan for the upcoming year. Reflecting on what went well in the current year and identifying opportunities for improvement can help ensure your next year will be more profitable and successful than ever before. To learn more about end-of-year accounting and available tax services, contact Parker Business Consulting today!
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of our clients’ same issues.