Accounting Tasks at Year-End

Ever wonder why you’re so busy this time of year? As you probably already know, there are a lot of extra tasks needed to be completed for year-end. While much of it is required by the government, clean-up and adjustments are vital to keeping your books accurate.

Here are just some of the items that are performed at year-end:

Books-related:

• Just about every asset on your balance sheet needs to be verified in some way or other:
  • Petty cash accounts need to be reconciled and reimbursed as of year-end
  • Bank accounts need to be reconciled with the bank statements. This includes PayPal.
  • Accounts receivable balances and all other receivables need to be tied to each customer and any amounts determined to be uncollectible need to be written off.
  • A physical inventory count needs to be taken and the inventory account should be adjusted accordingly.
  • Fixed assets need to be reconciled to their fixed assets ledger and depreciation should be properly recorded.
  • Goodwill accounts need to be checked and amortization adjusted.
  • Prepaids, deposits, and all other asset accounts need to be adjusted if necessary.
• Liabilities and equity need to be adjusted too:
  • Accounts payable balances and all other payables need to be tied to each vendor.
  • Credit card accounts need to be tied to the statements and reconciled.
  • Liabilities that haven’t been recorded need to be added to the books.
  • Loans need to tie to lender statements, and interest paid on loans needs to be properly expensed.
  • The Equity accounts need to be checked and tied out to prior year balances.
• Corrections and adjustments need to be made:
  • Any misclassifications and corrections need to be made on the books with adjusting journal entries or other classification tools.
  • If the client is a cash-basis taxpayer, a reversing journal entry needs to be made to get the correct tax numbers.
• A clean set of reports can now be run and used.

Tax-related:

• If you have payroll, employees need to be sent their W-2s before the end of January, and the federal and state government need a copy of the W-2s with a W-3 transmittal.
• For employees, you may also be required to have an up-to-date W-4 signed by them.
• For employers, your federal unemployment 940 return is due.
• If you have contractors, they need to be sent their 1099s before the end of January, and the IRS needs the 1099s and the 1096 transmittal.
• For contractors, you must also have an up-to-date W-9 form from them. You may also need to request an insurance certificate, or you may get a surprise at your workers compensation audit.
• For vendors who claim exemption from sales tax, you’ll need to be sure you have an exemption certificate in your files from them.
• If you pay sales tax annually, your return and payment are due.
• Your personal federal, state, and local income tax and returns are due in the spring, or they can be extended until later in the year.
• Depending on the type of entity your business is organized as, you may have franchise, federal and state tax returns to file. This deadline comes up sooner than the individual tax return due date.

Documents-related:

• This is a good time to file and store your receipts in case you are ever asked for them. For long-term storage, thermal receipts should be copied or scanned in before the ink fades.
• This may be the perfect time to start thinking about paperless document storage!

We are often so busy this time of year because of all the extra work we must do over and above the normal monthly load. If you have questions about any of this, please reach out anytime.