Closing out the Books? Follow This Checklist
As you’re cleaning up your books for year-end, there’s some steps you can take now to make tax-time easier and start the New Year off right:
- Verify that you have W-9 forms for each of your independent contractors or at least have their Tax Identification Number on file. You will need this information in order to prepare 1099 forms in January. Going forward, it’s a good practice to obtain a completed W-9 form from each new vendor before you pay them.
- Review your Accounts Receivable. Are all of them collectible? If you have any bona fide bad debts on your hands, it’s time to write them off before year-end. You should also review your receivables to reconcile them against your customer accounts, confirming the balance of each.
- Review your Accounts Payable. Wherever possible, you should reconcile your vendor accounts against a statement from that vendor.
- Reconcile all of your bank accounts using the year-end bank statements. Did you know that you can reconcile any asset or liability account in QuickBooks? Take this opportunity to reconcile all of your credit card accounts, lines of credit and outstanding loans. When reconciling your bank account, be careful to review any “Uncleared” transactions, as they may be duplicate entries, checks that were lost in the mail, or simply entries that should have been deleted.
- If you carry inventory, it’s time to do a physical count of your inventory and reconcile it against the inventory reported on your balance sheet. Take this opportunity to adjust your inventory for shrinkage, spoilage, or obsolescence.
- Make a list of all new equipment and other fixed assets acquired during the year, including the purchase date, amount and description. Your tax preparer will hug you for it! If you’ve disposed of any old equipment, whether by selling it or by putting it in the dumpster out back, make a note of that, too.
- Review your payroll liability balances and adjust if necessary. Also double-check that all payroll tax forms have been filed as necessary.
- Similarly, review your sales tax liability balance and confirm that your sales tax filings are up-to-date.
- For paper records, prepare to archive any records that you need to retain. For any records considered vital, make a copy that can be kept off-site.
- Finally, make a backup of your QuickBooks file, also to be kept off-site, if possible.
Following these steps will help you start the New Year off right and will reduce your workload when getting ready for tax time!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.
