The beginning of the year is a busy time for business owners. It’s also the most stressful. Most business owners want to ensure they have accurate records before they provide them to their tax professional. But where to start?
We’ve provided a handy checklist to help you. This checklist should give you a basic outline of what to review before the tax professional receives a copy of your year-end reports.
What should I look at?
▢ Reconcile all bank accounts to the statements that end either at or after year-end. After you have completed the reconciliations, Look at all outstanding deposits and withdrawals to see if there are any transactions that need to be voided or corrected.
▢ Reconcile all credit card accounts to the statements that end either at or after year-end. Look at all outstanding transactions when you have completed the reconciliations to see if there are any transactions that need to be voided or corrected.
▢ Review all fixed asset purchases. Verify that only major purchases with a life longer than 12 months are recorded as fixed assets.
▢ Reconcile all loan accounts. Verify that only the principal portion of any payments were recorded in these accounts and that the principal balance agrees with the balance per your loan statements.
▢ Reconcile salaries and wages expense to what was reported on your quarterly and annual payroll tax returns.
Which reports should I run?
▢ Balance Sheet – Take special note of any negative balances in any of the accounts.
▢ Aged Accounts Receivable – Verify that all outstanding items are still valid.
▢ Aged Accounts Payable – Verify that all outstanding items are still valid.
▢ Income Statement/Profit & Loss Statement – Verify that all transactions are related to income activities, all cost of sales transactions are related to direct costs, all expense transactions are for expenses and that transactions are properly and consistently coded.
Finalizing your records for year-end is a process that is crucial, but it should never be rushed. Verifying that you have accurate records does take effort, but it will save you much time and money in the long run. Looking for assistance in ensuring that your records are accurate? Contact us to set up a complimentary consultation.