Tips for preparing your books for year-end
The end of year is quickly approaching, which means it’s about time to start planning your accounting records to be ready for the new year.
Closing your books helps you prepare for income tax time and allows you to get other financials in order to continue leading a successful business. We’re here to remind you that there are several things to consider when completing your year-end books so you don’t miss anything if you’re doing it yourself!
First off, what does it mean to “close your books”?
Think of all the financial transactions your company has done over the last year. You should have some sort of record on those transactions, otherwise known as “books”. They let you know, as the owner of the business, how much money is flowing in and out of your business and can help you set trends as well as gain insights for the future of your business.
Closing your books means you are officially finalizing those transactions, and they are recorded to show where your business stands financially.
So, how can you get ahead of closing your books?
Gather all your financials
Get your statements and financial records from your bank that date back to the beginning of the year. These statements are crucial for your accountant to prepare your end-of-year books correctly and efficiently. Instead of getting your information online, going to your bank directly can ensure you’re getting everything and not missing any important information.
Taking inventory is a step that many people don’t even think about when preparing their books. Assets and products need to be compared to your balance sheet from the beginning of the year to ensure there aren’t any major discrepancies. If there are some inconsistencies that you notice off the bat, be sure to note it for your accountant.
Budget for the year to come
When all is said and done for this past year’s books, you can now start preparing for your business’s future. Your accountant can help you budget for the upcoming year, which is important to understand if your business is operating within your means. Think of budgeting like a forecast that is dependent on your previous year. This is where you prioritize and set goals based on how the previous year went, so your business can grow in the upcoming year.
Don’t wait until the last minute
Some people thrive under pressure, therefore they procrastinate everything they do. Unfortunately, that isn’t the case with closing your books. Preparing all the documents and reconciling accounts takes a lot of time – weeks, or even months! To ensure your business is in good standing, you shouldn’t wait until the last minute to get things done. The phrase “the sooner, the better” is perfect to apply to this situation so you can continue to grow your business.
If you need help closing your books, or even just need some advice, our tax professionals at Bumgardner Morrison can help you! We provide complete tax services to ensure you and your business are prepared for the new year.