It’s that time of year again! As you get ready to file your taxes, keep this checklist handy.
Bank Accounts, Credit Cards, and other Balance Sheet Accounts. If you are able to reconcile your accounts, do it. Especially pay attention to Fixed Assets, Liabilities such as loans, etc, and other Balance Sheet accounts that might not get as much attention throughout the year. Collect activity statements, amortization schedules, and tie everything through the reconciliation feature (when possible) to the account balance in your books.
Complete a Physical Inventory. You should be completing physical inventory counts throughout the year, and once a quarter at minimum. In any case, you need to make sure your Inventory Valuation is accurate at year end, with both values and counts.
Review Open Accounts Receivable and Payable. Make sure that your open AP is accurate, and that you have no doubtful or heavily aged accounts on your A/R report. Bloated A/R can cause over optimism around cash flow and can lead to trouble. Make sure your business has a common sense collections policy, and a collections agency on call if needed. Hopefully you don’t need them, but you need to have a plan to ensure the health of your business.
Payroll. If you have Enhanced payroll, or another DIY product, make sure you collect their end of year checklist and tick off the items (Assisted and Full Service – make sure you find your lists, too!) In a nutshell, you want to make sure that employee information is correct (now is a great time to collect W4s and W9s for the next year), make sure that employees don’t have changes for the following year, and reconcile your payroll reports to your payroll Profit and Loss accounts in QuickBooks. For contractors, run the preliminary 1099 reports, and make sure you have the correct email or snail mail data to get their 1099Ms out.
Watch for Tax Notices. You should receive new Unemployment withholding notices with your experience rate, you may receive business property tax notices to complete, and sales tax may send out new guidelines around the new year, among others. Watch your mail and make sure that anything received is handled appropriately.
Reconcile your tax forms to your books. Make sure that you or your tax professional compare your taxes and books, and make any closing entries if necessary, especially around the Equity section of your Balance Sheet, or around Depreciation (you can use tax based depreciation for your books if it is not materially different from book-based depreciation). Talk to your accountant about this.
Make any unused Vendors, Items, or Customers inactive. These lists love to get out of control through the year, and the beginning of the year is a great opportunity to mark ones you don’t use or work with any longer as inactive.
Build Your Budget. Now is a great time to review the previous year’s performance and build your operating budget for this year. You can always run Budget vs. Actual reports to see how close you are to where you are expecting to be. If you don’t have budget capability in your QuickBooks, let us know so we can help you upgrade, or build one in Excel. Either way, make sure you know where you expect numbers to be. Budgets are great for goal-building in conjunction with your KPIs.
File Your Taxes. Hopefully you are working with a trusted CPA or Enrolled Agent or other tax professional. Make sure you get your reports in early, so they have time to ask questions, and provide the workpapers if needed to show that your books are ready to close and file. Send them a portable or accountant’s copy of your Desktop file, or add them as an external accountant user in QuickBooks Online. Whatever software you use, communication is everything. The earlier you get your taxes complete the more your tax advisor will appreciate you, and the quicker you can count last year complete. Don’t be the guy with the shoebox of receipts. It’s 2019. Digitize that mess! You can attach receipts to your transactions in QuickBooks Online or Desktop, or manage them with many 3rd party apps.
Lock Your Books. In the video below, you can see how to lock your books, whether they are in QuickBooks Online or Desktop. DO IT.
Call KHB. Have questions, or was your closing process a little hairy this year? Call us to help streamline workflows and put a plan in place to make 2019 amazing.