As the year ends, it’s time for business owners to take a close look at their financials. Year-end accounting isn’t just about closing the books, it’s about setting the business up for a strong start in the coming year.
As you head into the new year, use this checklist to ensure you’ve covered all the essentials.
1. Review & Reconcile All Accounts
Start by reconciling your accounts to ensure accuracy across all financial records.
- Bank Reconciliations: Match all bank statements to the general ledger.
- Credit Card Accounts: Ensure all transactions are recorded and properly categorized.
- Investment Accounts: Reconcile all statements to the general ledger.
- Loan Balances: Confirm principal and interest amounts against general ledger.
- Accounts Receivable & Payable: Verify all customer invoices and vendor bills have been entered into accounting software.
Remember that by reconciling regularly you can avoid surprises and keep your books “audit ready.”
2. Verify Income & Expenses
Next, review your income and expenses to confirm everything is recorded in the correct period.
- Review income to ensure it is recognized in the correct period.
- Record any missing business-related expenses.
- Reclassify any personal expenses that were erroneously recorded in business accounts.
- Review prepaid expenses and deferred revenue and make any year-end adjustments.
- Review large purchases for expenses that should be capitalized.
This step helps ensure your books are accurate and ready for tax filings.
3. Conduct a Physical Inventory Count
For businesses that manage inventory, a year-end physical count helps align financial data with real-world stock.
- Compare inventory counts against your inventory system and adjust for discrepancies.
- Investigate variances – miscounts, shrinkage and damages can all affect profitability.
4. Review Payroll & Contractor Payments
Make sure payroll and contractor payments are up to date and compliant with reporting requirements.
- Confirm all payroll is recorded and reconciled against quarterly tax filings.
- Verify that employee information is current for W-2 processing.
- Verify that all contractor information (W-9) agrees with 1099 forms.
- Accrue any unpaid wages, bonuses, and commissions earned during the current year.
Double-checking payroll now can prevent costly errors during the year-end reporting.
5. Update Fixed Asset & Depreciation Schedules
Keeping your fixed asset schedule up to date ensures depreciation expense is accurate for year-end reporting and tax purposes.
- Review the fixed asset register for new disposals or acquisitions.
- Ensure that depreciation has been calculated through year-end.
- Confirm that disposed assets have been removed from the books.
6. Review Financial Statements
Once your accounts are cleaned up, review your financial reports to assess performance and plan.
- Balance Sheet
- Profit and Loss Statements
- Cash Flow Statement
Completing your year-end accounting checklist ensures that your books are accurate and ready for tax and year-end reporting.
If these steps feel overwhelming, reach out to the team at ARI for support.
Contact us today to learn more about how we can help.
In the meantime, discover the 10 benefits of outsourcing your accounting function.
