Year End Checklist

2016 Year End Bookkeeping Checklist

It is that time of year again to review your bookkeeping entries and takes steps to complete items that still need to be taken care of. The more organized and complete you are with your bookkeeping, the easier it will be to close your bookkeeping files and prepare your Federal Income Taxes. If you are like most small businesses and submit your information to a CPA to prepare your Federal Taxes, the more organized you are the less time it will take the CPA to prepare the return, and that in turn will save you money.

If you have updated your bookkeeping files on a monthly basis, I suggest you make an appointment with your CPA and that person take a quick review. Your CPA can give you an estimate of what your tax obligations will be so you can include your payment in your upcoming cash flow needs.

End of Year Tasks

  1. Reconcile all bank statements.
    The process of reconciling your bank statements helps to ensure that you are recording all expenses and have entered all payments received from your customers. Banks can also make mistakes or charge fees that they shouldn’t. By reconciling bank statements on a monthly basis you can make corrections in a timely manner and when they are fresh in your mind.
  2. Record all transactions that are not paid for with your checking account.
    All charges from credit cards should be recorded and credit card statements reconciled. Again, by making sure your credit card statements are reconciled, you are making sure you have recorded all of your expenses and review for any invalid charges that may be included.
  3. Enter any business expenses you may have paid for with personal funds.
    During the year you may have purchased items for the business that were paid for out of your personal checking account, with cash or with your personal credit card. The goal is to make sure you record all of your legitimate business expenses to minimize the net income on your P&L Statement.
  4. Invoice customers for all goods and services you have provided to them.
    This is crucial when it comes to running a successful business. There are many businesses that don’t succeed because they are not organized with their invoicing system. Items are not invoiced to customers so goods and services are given away for free.
  5. If you have Accounts Receivables, review the unpaid balances and contact those customers that haven’t paid.
    Review your Accounts Receivable Aging report and any customers that have unpaid balances over the terms you provide should be contacted to follow up on their payment. Your Accounts Receivable balance must correctly reflect the outstanding balances owed to you. If there is a balance on the Accounts Receivable report but you find the customer has paid their bill, then the payment was recorded incorrectly in your bookkeeping system and it’s time to make the correction.
  6. Review expenses.
    Run a report from your accounting software that shows the detail in all the expense accounts. Review each account and make sure you have categorized all expenses correctly. For example, it’s important to make sure you have all your Office Supplies listed in the Office Supplies Expense account and not in Auto Expense. When your CPA prepares your tax return, that person will need to categorize your expenses for tax purposes. Some expenses are not deductible, and it’s easier and faster for your CPA to prepare your tax return when you categorize those expenses correctly. Another reason to make sure your expenses are categorized correctly is to review your expenses and compare what your costs are from month to month and year to year.
  7. Mileage is an expense that is easy to forget.
    When you use your car to travel for business purposes you can expense this mileage. Keep a record of the mileage and purpose for all your trips. The 2016 IRS standard mileage rate is $.54 per mile for business miles driven. Your commute to and from your office is not allowed but you may have other trips that have been taken for business purposes and this can add up over the course of a year.
  8. If you have employees, make sure their paycheck information is accurate.
    Ask employees to check their last paycheck stub to make sure their name and addresses are correct. This information is used in January when W2 forms are prepared. Provide new W4 forms for any changes an employee wants to make and file these in your office. (I have a link to the W4 form on my website page labeled Rates and Limits.)
  9. Have you paid any contractors for services?
    Have each contractor complete the IRS W9 forms. (I have a link to the W9 form on my website page labeled Rates and Limits.) In January you may be required to file a 1099 form for these contractors and you will need their accurate taxpayer information.
  10. Prepare a budget for next year.
    To stay organized and be successful, a budget is a very helpful tool. The easiest way to start a budget is to take your Profit and Loss statement for this year and enter this information into the 2017 budget. Then take a look at the sales and expenses for each month and make any changes you see fit. This is not a tool that you prepare and then forget about during the year. It’s important to keep reviewing your budget against the actual income and expenses throughout the year.