Thankfully, there are many ways for accounting professionals to maximize the success rate of their year-end closing activities. The following checklist can help prevent the process from feeling overwhelming and ensure you have covered all the essential bases nearly any company will need for their year-end closing. If you’re like most business owners, you’re probably juggling end-of-year accounting procedures in addition to heavier traffic and sales and payroll tasks. Your profit and loss statement (also known as P&L or income statement), both for the current month and year-to-date, tells you how much you earned and how much you spent. Comparing your actual numbers to your planned numbers highlights where you may spend too much or not enough. Just as you reconcile your personal checking account, you need to know that your cash business transaction entries are accurate and that you are working with the correct cash position.
You may also need to follow up with the relevant parties to ensure there are no issues on their end. Creating a proper follow-up process with the business can help minimize outstanding invoices. Whatever you decide to do, make sure you have a plan in place to back up those precious accounting records for your business. To ensure you securely save your accounting data for the new year, add backing up information to your year-end closing checklist. If your business has inventory, complete an inventory check before year-end. If you find discrepancies between your count and balance sheet, make adjustments.
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The CRA requires that all small businesses that earn more than $30,000 make HST/GST payments. But CRA rules state that you must change your HST/GST reporting period if you experience an increase in sales and ppp loan forgiveness resource center taxable supplies. You can also use ChatGPT to create your accounting and bookkeeping workflow checklists in seconds. We recently launched our ChatGPT integration in Financial Cents, you can check it out.
This can be time-consuming and can increase the risk of errors in financial reporting. When it comes to tax deductions, it’s essential to keep track of all eligible expenses throughout the year. Some common deductions include charitable contributions, mortgage interest, and medical expenses.
What are the steps involved in year-end accounting closing process?
Although recording transactions manually or in Excel sheets is acceptable, it is probably easier to use accounting software like QuickBooks. There are three main pillars of business accounting reports and one of them is your income statement, otherwise known as a profit and loss statement. HighRadius Autonomous Accounting Application consists of End-to-end Financial Close Automation, AI-powered Anomaly Detection and Account Reconciliation, and Connected Workspaces.
- If the auditer finds any underpayment of taxes, it will come to you, not your accountant, for any additional taxes, penalty and interest.
- Such unfortunate incidents are caused by bad time management, poor organization, and administrative inefficiencies.
- This checklist will provide a streamlined method of creating invoices while saving time in the process.
- This document is essential in determining whether you had a year that exceeded expectations (with record profits and goals met) or fell short of expectations (with lost money and unforeseen expenses).
- Keeping a record of all accounting data for future reference is critical to all businesses.
The online checklists summarized here are for use in reporting under International Financial Reporting Standards (IFRS); for specific jurisdictions, please contact us. If your taxable supplies reach more than $1.5 million you must switch to quarterly reporting, and if they exceed $6 million, you must switch to monthly reporting. If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period, year-to-date income statement to identify variances and make adjustments.
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Thoroughly investigate these records and see if any discrepancies are discovered. It may be necessary to adjust one of your records to make the balances equal. If you use software, you should be able to easily grab the necessary documents for your accountant. To keep your receipts in shipshape year-round, make sure you organize from the get-go. As soon as you get a receipt, organize it using your filing or storage system. That way, you don’t have to worry about misplacing the receipt or forgetting to account for it.
- Instead of scrambling (or forgetting) to get your year-end processes complete, use a year-end accounting checklist to organize the way you wrap up the year.
- The process of recording transactions includes logging and verifying the money going in and out of the door, as seen in the general ledger.
- We like to recommend Financial Cents as it is very easy to use and built specifically for accounting firms.
Another important aspect of expense management is ensuring that all expenses are properly documented. This includes keeping receipts and invoices for all business expenses. Businesses should also have a system in place for tracking expenses that are paid for with cash or personal funds, as these expenses can be easily overlooked.
Manual Data Entry
If you have invoices yet to be paid, your best bet will be to categorize them based on how likely you think a payment will be before the end of the fiscal year. Generally speaking, the younger the unpaid invoice is, the more likely you’ll be able to coerce a payment out of the client in question. This is by no means an exhaustive list; the steps required can also vary depending on the nature of the business going through the year-end accounting process. Look at your accounts receivable aging report to see if you have any late or unpaid bills before year-end. Follow up with vendors and pay off bills to start off the new year with a clean slate.
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This budget will also take startup costs into account and help you determine what sales will allow you to reach profitability. Don’t leave for tomorrow what you can do today, keep your head on a swivel, avoid kicking the can down the road – whatever your preferred colloquialism, you get our drift. Stay on the lookout for arising issues and address them throughout the year to leave your year-end as worry-free as possible. Remember, there’s only so much time, energy, and resources to go around, so diluting your efforts across too many fronts can create lackluster results for all. If so, you might want to rethink the way you organize business receipts to tidy up for the new year. You must get an accurate count of the materials and supplies you have on hand if your business has inventory.
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They let you analyze past and present transactions and help you predict the business’ financial future. In addition to protecting your assets and facilitating the transfer of wealth, preparing for your possible incapacity should be a key part of your estate planning checklist. The end of the month is the perfect time to review all invoices and understand the balance of aged receivables.