The end of the year is fast approaching. It’s never a bad idea to get an early start on getting your accounting information together and in good order. The checklist below will help you do so.
Make Sure You Understand Your Obligations
It’s a great idea to start prepping company accounts near fiscal year end to ensure they’re ready for filing and form submittal. A majority of businesses end up putting this off until the end of the calendar year. December isn’t exactly a slow month for most people, so, getting an early start will save you time and headache.
Utilize the below checklist to get a handle on planning tasks out for year-end. This will prevent those last minute stresses that pop up as a result of waiting until the last minute.
- Make a decision on employee bonuses and withhold the required tax
- If you reward with bonuses, remember the involved tax. FICA, FUTA and income tax are to be withheld from bonuses – like regular income. If you decide to reward your employees with bonuses, don’t forget about tax. Bonuses are subject to income tax withholding, FICA and FUTA taxes – just like regular pay. Go to the SBA website if you need more details.
- Contractors and Vendors should be paid in full by year-end
- It’s pretty straightforward for vendors. Contractors are a little trickier. A W-9 form may need to be submitted – check with your accountant for clarification. Each contractor will need a 1099-MISC form by January 31st of the following year.
- Prep records for payroll at local, state and federal levels
- User-friendly payroll software will make this easy to do. If you have any issues, be sure to ask your bookkeeper or accountant. Compliance with all regulations around payroll – including recent changes – is highly important.
- Analyze balance sheet and P&L reports for what was done well and not so well
- Equities, liabilities, and assets will provide a good idea of how your business performed over the year. Create visual reports using your accounting software to determine where things went well and where improvements can be made.
- Income statement = understanding your profitability
- See profit and loss for the year with your income statement as it will show each revenue-generating item and expenses that are tax-deductible.
- Cash reports are great for understanding cash on hand
- Cash-flow is the lifeblood of every business – making it the most important part of any business. Create one of the most vital documents to your business with accounting software – a cash-flow statement.
- Take quarterly estimated tax payments for the year and add them up
- A majority of business owners make quarterly estimated tax payments during the year. Be sure to track what’s paid – it’ll help estimating what to pay after year end.
- Review your payroll system for info on current and past employees
- Ensure only current employees are contained in payroll and it’s fully up-to-date. Past employees shouldn’t have access to company systems either. Make sure the correct info is in place for employee personal information.
- Go over coverage and rates of insurance policies
- Discuss recommendations with your insurance company. Be sure to ask other insurers to find the best deal. Check you have all statutory and recommended insurance coverage.
- Confirm tax deadlines (which vary based on the structure of your business)
- Schedule time with your bookkeeper, accountant and/or financial advisor
- Come year end, each will have work for your business. Collaborate on making lists of tasks to be carried out to help focus on your business at such a busy time of year.
- Estimate your tax payment using the proper accounting software
- Ensure the right amount is set aside for state and federal taxes by starting now. This will help keep the amount safe and separate, too. A great deal of businesses fail to accurately do this, which is a drain on the business.
- Figure out if an extension will be needed
- Talk to the IRS and check their website for more information on applying. Do so as early as possible or you’ll have a late fee payment.
- Ensure all client contact info is updated
- Knock out two important tasks while doing this: ensure accuracy of client details and thank them for their business this year with an email. They’ll greatly appreciate it.
- Compare your goals and results for the year – develop new ones for next year, too
- What achievements were made? Do they match intentions? Understanding this will help you motivated for the coming year as your business grows. Be sure to do this on a regular basis to stay on track.
Though these are not all the steps involved in prepping for year end, they will certainly help. After working through all of the above, take a break. Employers need a vacation just as employees do. Even a short vacation will do you well to refresh and get ready for the coming year.
Contact us to learn more or discuss how we might help out your situation.
Chris Mitchell, MBA | Director of Client Insight
The Robby Group | www.therobbygroup.com | firstname.lastname@example.org