For ordinary individuals, December is a month of enjoying holidays and Christmas. However, that isn’t the case for accountants and CPAs. The end-of-year means closing the books is approaching rapidly, and bookkeepers’ time has become increasingly scarce. As a business owner, managing your official finances is a tedious process, but it can make your taxes a nightmare if you don’t maintain the accounts.
Without a proper bookkeeping process for your business’s finances, numerous tasks can slip through the cracks and end up costing you financial loss in the long run. With a few bookkeeping tips, you can get a firm grip on your monetary situation and even enhance your earnings. The ambition is to get a simplified procedure explaining your business finances. Having a method that combines your expenditure, cash deposits, invoices, and tax records can make your life as a business owner so much easier than you thought, especially during the tax season.
Importance of bookkeeping practices:
Bookkeeping is a crucial part o any business venture. To make this process simpler, always record your cash receipts. Having complete records of transactions will help you at the time of claiming deductions on tax returns. Keep track of your reimburse expenditures so you won’t end up paying out of your pocket during rainy days of the business.
At this time of the year, business owners rely on their bookkeepers to maintain accurate financial accounts to timely achieve the objectives. However, maintaining a good set of books doesn’t happen naturally, but we’ve to create versatile strategies for successful execution. For this purpose, here’s a list of three best year-end practices for bookkeepers.
Updating the accounts:
Bookkeeping isn’t a highly complex task. However, without the right tools and sensibility, it can go wrong. As the year comes to the closing time, you’re obliged to have a firm understanding of your business’s finances. It means extra time is needed to update your books.
If you’ve employed a bookkeeper, give them space to maintain all the necessary reports and schedule a day to review them all together. It will indicate that both the executives stand on a mutual financial decision. Also, if the financial reports are updated, preparing a tax return would be highly simplified.
When it comes to cleaning up the end-of-year accounts, the best area to begin is the source documents like cash receipts and invoices. Whether you’re managing records manually or opt for an automated system, you need to ensure all official records are present in your documents.
Reviewing accounts:
After updating the finances, it’s time to review the financial condition of your business. To recognize any year-end tactics beneficial to the company, a bookkeeper must go through records, including profit and loss statements and balance sheets.
At this point, you might also want to examine the current accounting system and understand the pros and cons of tracking the financial information. With the advancement of technology, we can also help streamline any efficiency if needed. Based on the year’s finances, it will be an excellent choice to make wise decisions for the future.
Maintaining accurate files for the account receivables and payables is always recommended. However, the year-ending period is a great time to review them at least once.
Closing accounts:
Now that you’ve updated the accounts and got a stronghold on your current finances, it’s time to close the accounts and begin preparing for the following year.
A year-ending bookkeeping practice is the most feasible way to maintain the accounts, both manually and digitally. For instance, closing out old accounts provides the opportunity of managing and clearing old customer accounts, inactive vendors, employees, and expenditure accounts.
Moreover, the year-end procedure allows you to study the previous year’s finances and prepare a budget for the coming period accordingly. By planning for the tax payments and identifying significant expenditures, you’ll get insights into potential concerns that might arise throughout the term.
If you get so preoccupied with operating your business that year-ending bookkeeping practices catch you off guard, don’t worry; execute a powerful strategy to overcome the impending obstacles regarding the company’s finances.
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