Year End Accounting
In some brokerages, you mention Year End procedures to the Accounting Department, and you can watch the hair on the back of their neck rise. Most businesses use the calendar year as their fiscal year. As the name implies, this is the end of a year’s worth of business and all that it accounts for. It is also the information that must be gathered for…. taxes. Forecasting and budgets are planned around these numbers too.
The number one thing to do for a smooth year-end closing is to stay on top of your transactions as they happen! All transactions should already be in your system. Each month should be reconciled as the month ends. The worst thing you can do is wait until the end of December to try to complete a years’ worth of data. At year-end make sure all your bank accounts, credit cards, loans, receivables, payables, asset accounts, payroll, etc. all are reconciled. What is in your computer should match the statements from the banks. Make sure everything has been classified to the correct General Ledger accounts. Once again this should be done monthly. You don’t want to be running your business on inaccurate information if you haven’t reconciled.
Steps to Keeping Track
Next, take a serious look at your Accounts Receivables and Accounts Payable. Do you have outstanding Receivables that are uncollectable? Write them off now so you aren’t paying the taxes on that “income”. Send statements out to get that money collected. Check your Payables and make sure you haven’t missed paying a bill. Make sure all your expenses are in. Whatever amount you pay in rent each month should show up as 12 transactions on that expense on your Income Statement and so on.
Take a review of your assets or inventory. Do an inventory count and make sure it matches up with your Income Statement and make any necessary adjustments.
You may have an accountant or financial advisor look over your bookkeeping records. They may be able to provide you with valuable advice or recommendations.
Now that all your business information should be in your TMS system and you have verified it is accurate, then it is time to evaluate this information. Step back from the details and review the year. Look at the positives and negatives for the year. What was your best accomplishment? What could you have done better? Apply that thinking into setting goals for the year coming up. Determine what your budget is going to be for this new year.
To summarize, it is important to keep your General Ledger accurate throughout the year. Then use this information to evaluate your business and adjustment your business model, if necessary. At the end of the year, the accounting should not be cause for anxiety but as a time of reflection. Learn more about accounting and request a demo here