Four Ways to Make Closing the Books at Year-End Less Stressful

It’s never too early to start planning for year-end and tax filing season. Before we know it, the summer has whizzed by, and we are heading into fall and the start of the year-end crunch.

It may sound obvious, but the most effective way to relieve year-end stress is to get and stay organized all throughout the year. This will eliminate the last-minute stress of emptying the shoe box full of paper and trying to classify your expenses by relying on faded receipts during the closing process.

It can feel daunting and overwhelming if you are not naturally organized, so the most important step is to get started.

1. Start by eliminating paper

Scan important paperwork and digitize receipts. This will make finding documents less time-consuming and will save physical storage space.

2. Embrace the power of digital tools

Excel is a great tracking tool for both the novice and the pro. You can easily create itemized workbooks, enter transactions, and eliminate the need to search through stacks of paper when tax time hits. Having everything you need at your fingertips is a sure way to make the end of the year less nerve-wracking.

3. Stop using paper checkbooks – invest in accounting software

Like any new software system, there is an investment of time upfront to set up accounting software, but once you do, it will save you hours of work each week by handling time-consuming tasks. These products integrate with your online banking systems so you can quickly and easily download transactions rather than entering them manually. And most even generate important tax reports – for example, sales and use tax and payroll tax reports.

At the end of the year, having organized, categorized data makes it that much easier for your tax accountant to file your return and calculate all of your available tax credits.

4. Automate repetitive tasks

When you have your accounting software up and running, automating tasks is a great way to eliminate all the sticky note reminders covering your desk. Need to pay a supplier monthly? Want to periodically transfer money to your retirement account?

Your time is best spent focusing on growing and strengthening your organization, not reconciling bank statements, or worrying about year-end requirements. That’s where ARI can help.

What is the closing process in accounting?

1. Close revenue accounts to income summary
2. Close expense accounts to income summary
3. Close income summary to retained earnings
4. Close dividends to retained earnings

Some of our clients have found that their CEO or Executive Director spends as much as 75% less time focused on accounting when they outsource to ARI. And it’s not just time you’ll save. You’ll very likely find it’s less costly to partner with us than to staff an internal accountant. Check out all 10 benefits of outsourcing your accounting and bookkeeping needs.

Summary

Reducing year-end accounting stress starts with staying organized throughout the year, digitizing records, using accounting software, and automating routine tasks. Proactive planning makes the closing process more efficient and simplifies tax preparation.

FAQs

How can businesses reduce stress when closing the books at year-end?

We believe the most effective way for businesses to reduce stress at year-end is to get and stay organized throughout the year. Planning ahead eliminates the pressure that comes from last-minute scrambling, such as sorting through paperwork or trying to classify expenses using old receipts. While the process can feel daunting at first, starting early and maintaining consistent organization significantly reduces the stress associated with closing the books.

Why is digitizing receipts and paperwork important for year-end preparation?

Digitizing receipts and paperwork plays a critical role in simplifying year-end preparation. By scanning important documents and storing them electronically, businesses make locating records faster and more efficient while also saving physical storage space. Digital documentation reduces the time spent searching for paperwork and helps ensure that all necessary records are easily accessible when closing the books.

How does accounting software make the year-end closing process easier?

Accounting software streamlines the year-end closing process by handling many time-consuming tasks automatically. While there is an upfront investment of time to set up the system, accounting software ultimately saves hours each week by integrating with online banking systems and allowing transactions to be downloaded quickly rather than entered manually. Many platforms also generate key tax reports, such as sales and use tax and payroll tax reports, making it easier for tax accountants to file returns and identify available tax credits.

What tasks can be automated to simplify bookkeeping and tax preparation?

Once accounting software is in place, many repetitive tasks can be automated to reduce manual effort and eliminate the need for reminders. Recurring payments to suppliers, periodic transfers to retirement accounts, and regular reconciliations can all be automated. This allows business leaders to focus on growing and strengthening their organization instead of spending time on bank reconciliations or worrying about year-end requirements.

What steps are involved in the year-end closing process in accounting?

The year-end closing process in accounting involves several key steps to finalize financial activity for the year. These steps include closing revenue accounts to income summary, closing expense accounts to income summary, closing income summary to retained earnings, and closing dividends to retained earnings. Completing these steps ensures the books are properly closed and the organization is prepared for financial reporting and tax filing.