When companies are understaffed or putting their accounting to-dos on the back burner, they can make certain errors in reporting their finances. Overstatement of expenses, revenue miscalculations, and inaccurate debt changes are some of the most prominent errors that are common in companies at the year-end. These mistakes can not only lead to potential financial fallout but also damage your reputation by labeling you as disorganized.
The growth of your company is hindered because of these miscalculations and errors. These errors have significant implications on your general taxes as well as payroll taxes that can further lead you to pay costly penalties by the IRS. Establishing a solid year-end accounting to-do checklist will ensure that your business does not face any extreme circumstances that can hamper your reputation or burden you financially. Below are some of the guidelines to keep everything in order.
Keep a Check of Internal Operations
The amount of control you have over the internal operations determines if your business will be able to maintain accurate bookkeeping records for the financial year. Look for minute errors. To do this, you have to narrowly inspect each procedure that is currently being implemented. It has been researched that businesses lose more than $100,000 annually due to internal deceptions. Therefore, your accounting to-do list should prioritize the efficiency of internal operations.
Comply with Payrolls
Non-filing of payroll taxes can be a blunder to make for any business. The IRS has hard and fast rules for the filing of taxes related to employee payroll as it is not your money and you are only acting as a caretaker for the money until it is paid to the IRS. Also, the end of the fiscal year is a critical time for your employees as well because they are expecting increments and promotions. Giving them bonuses along with their payroll motivates them which will ultimately show in their performance.
Collect the Receivables
Research shows that 29% of start-ups fail due to a cash crisis. Therefore, your accounting to-do list for the year-end must focus on collecting all of the accounts receivables, which will also reflect positively on your balance sheet. You will have to push your clients to pay their remaining invoices as soon as possible so that you can clean up any reconciliation issues. Maintaining control over the cash flow of your company is key.
Conform with the GAAP
If your books are clean and everything is clearly mentioned according to the GAAP principles, you will attract more investors and your clients will be comfortable working with you. This is something you must follow all year long but, if you haven’t, consulting a professional accountant or bookkeeper must be on your accounting to-do list. Doing everything according to the rules will ensure that your company stays out of any trouble with the IRS, which is also an achievement in itself for your end of the year goals.
Plan for Income Tax
This is an important time for you to identify your tax needs and hire a professional so that you can minimize your tax payments in compliance with the rules. Many small businesses do not consider tax preparations to be a significant task and end up paying fines and penalties. Although you have quite a few things on your plate, filing your tax returns is not something to be ignored. Keeping your business out of trouble is important for successfully pursuing your business goals and objectives.
Budget for the Future
Most small businesses fail because they run out of cash. This happens because they have not planned in advance for their expected expenses that are related to hiring new staff, buying new equipment, or any other things that come up in the future. Your accounting to-do list at the year-end must include your budgeting for the next year. With assistance from all of your stakeholders, you must compile a budget for the next year so that your business stays out of trouble and all of your plans to expand and grow your business are recognized in time.
The end of the year is always a time when you are filled with many tasks that need to be completed urgently. However, this sense of urgency must not elude you from reviewing the performance of the previous year. All successful companies in the world set measurable benchmarks which can be tracked at the year-end allowing them to review their performance instantly. Your accounting to-do list must implement certain measures to ensure that all of the objectives are being met and, based on the results, you can now plan for the upcoming fiscal year.
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