Our Business Services and Solutions Team is blogging again… and this time, the topic is year-end clean-up. We know, it doesn’t sound fun. And really, it isn’t. However, it is absolutely necessary and you will be glad you took the time to do it. It allows you to end the year on a clean note and it makes for a smoother start to the new year. Here is the prompt our team members are answering for you this time around:

The end of 2021 is upon us! What year-end clean-up and planning exercises should business owners be taking part in before the year draws to a close?

The end of the year can be a busy time for small business owners with the holidays, and wrapping up projects before the New Year.  However, it is not the time to forget about financial planning and taxes.  Small business owners should be ensuring their books are up to date and accurate.  This can help in determining where they can expect profits to be for the year.  Once this information is together, they should be working very closely with their tax accountant to ensure they are prepared for any taxes they may owe, as well as to utilize any tax savings.

• Natalie Bruns

Now is the time to make sure accounting books are organized and up-to-date to have an accurate view of the year and begin planning for the next. Business owners should review the company’s financials to ensure accounts and balances are accurate. Do account balances make sense? Has depreciation and amortization been recorded? Are there any abnormal expenses? Was there a significant increase or decrease in assets or liabilities from the previous year, and why? Are revenues and expenses close to projections for the year? These are just a few of the questions business owners should ask when reviewing financials to understand the company’s current financial position and to begin planning for the future. Business owners can benefit from scheduling a meeting with their CPA before the year-end to close the year strong and start the year in the right direction.

• Shirley Boatright

During the year, it is always a good idea to be sure your financial records are up to date; but it is especially important before the end of the year.  This will allow you to make any corrections to transactions which may have been recorded incorrectly during the year.  One step would be to review all of the accounts on your balance sheet & make sure they are accurate – cash accounts should reconcile to the bank statements;  are there any customer accounts in the AR which need addressed; likewise, are there any vendor accounts in the AP which need to be taken care of; are the loan balances accurate; are there any fixed assets which need to be disposed? Doing this type of review before the end of the year makes the year-end tax planning and filing process much easier.  Many of our clients ask us to take a look at their financial statements prior to the end of the year to assist in addressing any issues.

• Linda Lehman

It may be helpful to review your year-end 2020 to make sure you are taking care of/considering the same things you did last year or any new items that came up within 2021. Reviewing your 2020 support could shed light on how you handled year-end tax, payroll tax items or fringe benefits.  You may also discover that you are coding things to a different account or need to move transactions to a more appropriate account.  This is also the best time to make sure your support matches what you are presenting in your accounting system!  Here are some examples:  Do you have your PPP Loan Forgiveness support?  Is your cash balance in line with your bank statements?  Are your loan balances in line with your Loan Documents?  

• Julie Roe

Taking the time to do some clean-up of your Quickbooks is very helpful before the year is over. You can make sure cash accounts are reconciled and match the bank statements. Code and reconcile credit card accounts.  Review your Profit & Loss report to make sure items were properly coded to avoid additional questions from your Accountant. Review items coded to fixed assets and set paperwork aside to give to your Accountant. Will you be issuing 1099s? Now is also a good time to look over these expenses and prepare for your Accountant to as you for the information.

• Emily Zuver

Business owners should begin organizing and preparing their financial documents. This includes tasks such as verifying you have W-9s on file to issue 1099’s at the end of the year, calculating taxable fringe benefits to add back to employee W-2s and reviewing internal financial reports such as a Balance Sheet and Income Statement. This is also a good time to reflect on 2021 to prepare business goals and action items for 2022. This could include preparing a budget or identifying key performance indicators (KPIs) to begin tracking. These exercises will help you prepare for year-end compliance as well as reevaluate and realign your goals to start 2022 off on the best foot!

• Danielle Cottle

I would almost bet our customers say every year I will do better on my year end planning processes ! ? Of course they say that when there are many more months left in the year and then BOOM……it is November !!They think “ wow” the year went by so fast and I never got to my list of things to do for year end.

No worries, I think there is still time to do some of the common things to get prepared like :

1. Make sure all transactions are entered and up to date in the accounting system or ledgers. (like A/R billings entered and billed and vendor invoices etc., loans paid and interest allocated to  expense)
2. Check to make sure the prior year ending balances are correct, especially if they do not do monthly balance sheet recons.
3. Check over the financials and ledgers and look for negative amounts, and fix anything that may have been miscoded.
4. Check for large expense items that may really need to capitalized as an  asset vs. expense.
5. Make sure the bank reconciliations are all up to date and balanced. CASH is King so to speak and like our budgeting blog you have to know where the money is going and coming from is correct .
6. Check to make sure your employee files are up to date, like addresses etc.… for yearend w-2’s
7. Check to make sure your vendor file is also update for address etc. ,  and verify which vendors are contract vendors for 1099’s.

• Christine McCoy