As December approaches, businesses must ensure their financial records are accurate and up-to-date. Completing key accounting tasks before year-end not only helps maintain compliance but also provides valuable insights for strategic planning. Here’s your comprehensive checklist of critical year-end accounting tasks.

Reconcile All Bank Accounts and Credit Cards

The foundation of year-end accounting begins with ensuring all your bank and credit card statements match your accounting records. This process involves reviewing all transactions for accuracy and investigating any discrepancies that may appear. 

Take time to document and resolve any unexplained differences, and verify that all bank fees and interest have been properly recorded in your system. This reconciliation process is crucial for maintaining accurate financial records and preventing issues during tax season.

Review Accounts Receivable and Payable

A thorough review of your outstanding receivables and payables is essential for closing out the year properly. Begin by following up on any overdue customer payments and identifying potential bad debts that may need to be written off. Ensure all vendor bills are properly recorded in your system and take time to reconcile vendor statements with your records. Consider paying outstanding bills before year-end, as this could have beneficial tax implications for your business.

Evaluate Inventory

For businesses that maintain inventory, a comprehensive evaluation is crucial. Conduct a physical count of all inventory items and reconcile these numbers with your accounting records. Take time to write off any obsolete or damaged inventory that can no longer be sold. Update inventory values to reflect current market conditions and document any significant variances you find. This process ensures your balance sheet accurately reflects your inventory’s true value.

Review Fixed Assets

Maintaining accurate fixed asset records is vital for proper financial reporting. Update your fixed asset register to reflect any changes throughout the year. Record all disposals and acquisitions that occurred during the period. Calculate depreciation on all applicable assets and review useful life estimates to ensure they remain appropriate. Consider whether any assets need to be written down due to impairment or obsolescence.

Payroll Review

A complete payroll review ensures compliance and accuracy in employee compensation. To do this verify that all employee information is current and accurate. You will also need to review benefit accruals and payments to ensure they’ve been properly recorded. 

The start of the new year can be busy, so begin processing W-2’s and 1099’s to avoid last-minute rushes come January. 

Tax Planning

Year-end tax planning can significantly impact your business’s financial position. This can come in many forms but it may look like reviewing potential tax deductions and credits available to your business. 

It is also important to consider the timing of income and expenses to optimize your tax position. Evaluate whether your estimated tax payments have been sufficient for the year and adjust accordingly.

Financial Statement Review

Preparing for year-end reporting requires a thorough review of your financial statements. To do this you will need to review your revenue recognition policies to ensure consistent application throughout the year, analyze any unusual transactions or variances that occurred, and document significant accounting estimates and their underlying assumptions. 

Budget and Forecasting

Use the year-end period as an opportunity to plan for the future. Compare your actual results to the budget you set and identify significant variances and their causes. Once you have done this you can begin preparing a preliminary budget for the upcoming year based on historical data and future projections. Document all key assumptions and projections used in your planning process.

Document Retention and Organization

Proper documentation is crucial for maintaining accurate financial records. Organize supporting documents for all major transactions throughout the year for easy access.

Ensure all electronic records are properly backed up and easily accessible by the appropriate people. This includes secure filing, restricting access, and creating backup copies of important documents for safekeeping.

Success in year-end accounting requires careful planning and execution. Start early rather than waiting until the last minute when time pressures can lead to mistakes. Create a detailed timeline with clear assignments for each task and team member. 

If you are looking for more advanced support consider working with one of our experienced accountants to help you navigate ending the year strong and starting with a confident plan.

By completing these tasks before year-end, you’ll be well-positioned to start the new year with accurate financial records and valuable insights for decision-making. Remember, thorough preparation now can save significant time and stress during tax season.

We’re here to help ensure your business closes the year strong and starts the new year right.