Strategic Business Solutions
| Don't forget these important year-end procedures for small businesses |
| Published Wednesday, November 5, 2008 |
by April Green
Our Strategic Business Solutions team can help you with your year-end needs. Our trained bookkeepers and controllers are certified in QuickBooks® software. We can help you decrease the amount of stress that comes with this time of year by helping you prepare and close your books.
Closing your books
Remember, QuickBooks® software has a "soft" close. This means that even after you have completed your year end tasks, you can make adjustments. No more adjusting on the first of the month – and hoping you remember when the next year-end comes around. The system allows for a closing date and password. This fail-safe measure alerts you when a date is entered that is before the closed date. You then have the option to continue entering the transaction or to enter a corrected date for the transaction. Having a closing date also gives you additional reporting capabilities in QuickBooks®. The system has a "Closing Date Exception Report" which is only triggered by this closing date and gives you details of changes that have occurred to this closed period.
The goal is to get your books in order and verify that account balances are accurate before year-end. Following is a short list of areas that you should think about at each year-end.
- Make sure that all bank and credit card accounts have been reconciled to the latest statements that you have received. If you run your books on an accrual basis, it is important to post the activity that happens between the last statement closing and December 31st.
- If you have inventory on your balance sheet, now is the time to verify that it is correct. A physical inventory should be done at least once a year to make sure that you are carrying the correct value on your books.
- Ensure that petty cash expenses have been recorded and the amount left has been verified.
- Run accounts receivable aging and compare it to the general ledger balance. The review of this report can show credits that have not been accurately applied to invoices and may alert you to potential bad debts on the part of your customers.
- Run accounts payable aging and compare it to the general ledger balance. This report can help you to look for double-posting of items. You may have entered a vendor invoice into the payables section and then, having forgotten that you did so, cut a check for payment under the "write checks" function. There may also be vendor credits that have not been applied to open balances.
- Review details of all new equipment and assets purchased or disposed of in the current year. Even if you do not make these adjustments yourself, this is an important part of your year-end procedures. If you utilize the fixed asset list, this can help you to keep track of these items throughout the year. These entries affect the amount of depreciation that needs to be expensed each year.
- Other adjustments known as accruals and deferrals that may need to be made or adjusted.
- Payroll needs to be verified for correctness and year-end reporting needs to be done. Not only do you (or your payroll service) need to issue W-2s to your employees, you also need to make sure that your books mirror what these reports indicate, from the Form 941 to the Form W-3.
- 1099s will need to be issued. Any independent contractor to whom you have paid more than $600 within the calendar year will need to receive a 1099.
The above items are by no means a comprehensive list, but rather a guide to point you in the right direction. Payroll activities and 1099 reporting alone have many steps to be taken in order to be completed accurately.
Planning for next year
The budgeting, forecasting, and business planning tools available in QuickBooks® can help you manage and make operational decisions for your business and to stay on top of your financial performance not only on a monthly basis, but also at year-end in preparation for the coming year.
QuickBooks® allows you to enter budgeted amounts for each account, job, and class for each month of the year. Then, at any time, you can create a report of your actual income and expenses compared to your budgeted amounts. In addition to budgets, QuickBooks® allows you to create forecasts. You set up forecasts exactly the same way you set up budgets. Forecasts allow you to make predictions about future income and expenses and to run "what if" scenarios to help you make better decisions about your business.
Using the Cash Flow Projector at year-end also helps you in preparing a six-week preview of all your incoming and outgoing cash. This information will help you project upcoming shortages and plan disbursements of cash accordingly (such as holiday bonuses). The projector takes into account your cash on hand, accounts receivable and accounts payable.
The Business Plan Tool in QuickBooks® walks you through a series of questions to develop a detailed plan for your business that follows the format recommended by the U.S. Small Business Administration.
Need help?
Whether you run on a cash basis, modified cash or accrual basis, there are always items that should be reviewed and potentially adjusted at year-end. If you need help with 1099 reporting, or reconciling all of your balance sheet accounts, our Strategic Business Solutions team stands ready to assist you. We offer remote and on-site assistance.
If you have any questions about your accounting system, financial planning, or year-end procedures, please contact us. We are available to help you with your year-end procedures, provide an extensive review of the financial health of your company, or complete a analysis on how effectively you are using your QuickBooks® file. Our strategic business advisors who serve as fractional CFO or outsourced controllers are able to perform an in-depth analysis that includes detailed information about your cash management, inventory controls, profit margins, debt structure, working capital, accounts receivable, and growth potential.
Need QuickBooks®?
If you wish to upgrade to a new tier of QuickBooks®, please visit our website for special discounts on software. We can also help you with installation and training.
April J. Green, CPA is a Manager in the Strategic Business Solutions Department and is based in our Fort Lauderdale office. With over 15 years of experience in accounting, she has owned her own business and served as Chief Financial Officer, Director of Finance, and Controller for large corporations. April brings that financial expertise to clients while serving as a Fractional CFO, an executive who assumes the role of an internal CFO on a recurring, as-needed basis. She focuses on providing consulting services to mid-sized companies in the areas of strategic planning, financial modeling, due diligence, internal control analysis, budgeting and projections, and obtaining working capital. April is a Certified Public Accountant, Certified QuickBooks® ProAdvisor, a Certified QuickBooks® POS ProAdvisor, and Certified QuickBooks® Enterprise Solutions ProAdvisor. Call her at 954.691.4540.
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