The Ultimate Year-End Accounting Checklist 2023

As the year ends, it makes sense to tidy things up and prepare for the new year. There will also be a risk of inaccurate and sloppy books leading to difficulties with taxes, the possibility of an audit, and poor decision-making. As for the cash flow statement, it simply lists all your cash inflows and outflows, along with a few other items of interest. However, if cash flow is negative, it means you have to obtain working capital.

Without accurate records, it’s difficult to track inventory, sales, expenses, and profits. When completing your year-end bookkeeping review, this is the perfect time to review your documentation for the year and check that everything is in order. Ultimately, a year-end inventory count is a vital part of maintaining accurate financial statements and ensuring the health of a business.

Prepare and Analyze Financial Statements

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Note that we are not able to provide private consultations, give advice, or answer questions. Some programs, such as QuickBooks Self-Employed, allow you to track mileage in their app. But a good ol’ pen and paper log with your start and end odometer readings and the date and reason for your travel will also do the trick. You should choose the option that works best for your business.

The sales from each vendor must be reported as the Gross Amount, which is what appears on the 1099-K. S-Corporation shareholders and partnership members use it to report their share of the business’s profits and losses. If you worked with an independent contractor or vendor and paid them $600 or more, you will report those payments to the IRS using Form 1099-NEC.

When you account for inventory, you will determine how much money you have spent during the year on goods and supplies. Also, it enables you to find out how much money you will need for purchasing additional inventory going forward, and to adjust spending accordingly. S-corp shareholders who hold 2% or more of the company need to report their benefits (health insurance, auto insurance, etc.) on their W-2s.

For this reason, your inventory should be tracked properly for tax filing. As mentioned before, you should have your formation documents at the ready—or know what your corporation status is—as this informs how your assets are treated when filing your taxes. Not only does this allow you to generate the necessary reports for understanding where your company stands financially, it gets you ready to file your annual tax return. Working with a proven accounting professional can help you accomplish both of those goals.

This is also a good time to review some of the less frequent expenses that your business may incur and make sure that they have been entered as well. This can include items that are pre-paid such as annual membership dues or insurance. Your business may also have other expenses such as legal fees that are even less frequent, that you need to ensure have been included. Before you can close the books for the year, you need to determine if you are offering employee bonuses and providing employee holiday gifts. You need to write these numbers down and set these costs aside for withholding taxes. Just like you need to collect open payments from invoices, you also need to pay any open bills.

Year-end accounting checklist template (downloadable)

If you’ve been so preoccupied with running your business that year-end bookkeeping tasks have caught you off guard, don’t panic. Take a deep, calming breath and get ready to tackle those accounts with a plan for streamlining the process. Even if you’re facing down the new year, use this checklist to help get you ready and implement a plan for next year. Working with an outsourced CFO can provide the financial expertise needed to create projections, as well as set sales goals and budgets. Outsourced CFOs can provide services on a part-time or interim basis, and they can accommodate a range of budgets. If you’ve made significant purchases in the past year, collect and organize the documents your accountant will need to create a depreciation schedule.

Your year-end may approach quicker than expected, and your bookkeeper or accountant is going to need time on their end to complete your books for year-end. You certainly don’t want to be stuck paying any late interest charges. Before you do a deep dive, take a first glance to make sure everything looks right. As you prepare for the end of the fiscal year, reconciling these items will speed up the process. Ideally, you can receive automatic payments from your customers with a class management software like Sawyer to avoid having to chase down payments at the end of the year.

Accordingly, the information provided should not be relied upon as a substitute for independent research. Gentle Frog, LLC does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers and viewers should verify statements before relying on them.

AI-Based Deduction Management Software

Mark the “https://bookkeeping-reviews.com/ the Books” box, set a date for locking the transactions, and select a password for future changes. Many businesses close their books at the end of the calendar year — after December 31 — although most don’t wait until the last day to make sure the books are in order. Other businesses choose to use a fiscal year, which is any consecutive 12-month period during the year. These dates vary by business, but year-end accounting should be performed prior to the last day of the 12-month period, which is when the books are closed.

It is a lot easier to get a W-9 filled out from a vendor before you pay them, rather than 6 months down the road after the contract work has been completed. If you are staring at a $30.69 charge in a fixed asset ‘Equipment’ account you most likely need to reclassify that small charge. Here are some things that you can do to get all your business receipts in order. One of the things to look for, is whether the balances are significantly higher or lower than you had expected. Other things to look for include an unexpected negative balance or any unexpected extreme differences from previous years.

Online bookkeeping experts work closely with you to ensure your books are organized and on time. Just like following up on past due invoices, you should take a final look at your accounts payables and make sure to settle any open invoices. You must complete each of the 1099-K forms, and your gross receipts must be at least as high as the amount you report on your 1099-K. Between getting over this year’s tax season and managing holiday sales, your bookkeeping task can easily fall to the bottom of your to-do list. Another practice is to make sure that your staff is trained on how to use bookkeeping software.

Another tip that will xero accounting integration you for the new year is collecting from customers who have not paid yet. You’ve got to take care of all your uncleared transactions, unpaid bills, and unpaid invoices. You will need to put in some effort if you want to collect past due totals. But it’s worth it since you’ll have more working capital to expand your business in the coming year.

End of Year Bookkeeping Checklist

In a paperless environment, it means keeping digital copies of all statements, invoices, and deposit records. Keeping accurate records is key in accounting, whether you are a small business owner or a large corporation. Having a well-documented checklist will increase your team’s efficiency and client satisfaction. We’ve outlined 8 key year-end steps to complete for each of your clients. To avoid overlooking anything, you need to stay focused and organized. Your firm should have a standardized checklist to ensure you prepare all the necessary forms for your clients and hit every deadline.

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This means that you will get an idea of how much revenue you generated and the payments you had to make. Preparation is key in order to be able to take advantage of valuable tax deductions, and have a clear picture of your business finances. Take time to review the year-end checklist for small business owners.

Scanning these vital documents will help serve as a backup system in case they are lost or destroyed. In the long run, digital copies will be significantly easier to deal with, as modern accounting technology can access them and expedite processing their contents. The more prepared a professional can be for the worst, the better off the entire process will go.

Many business owners who’ve closely watched their P&L reports throughout the year are surprised by their taxable income. If you’re making payments on an asset that you’ve already depreciated, those payments aren’t deductible expenses . Year-end accounting is a series of steps performed to ensure that your financial transactions are up to date and recorded correctly. Year-end accounting is performed to balance — then close — your books for a 12-month period. This allows you to run accurate annual reports and financial statements for your business. Year-end accounting also helps you spot and correct any errors in your books.

Most importantly, analyze your profit and loss reports, income statements, and balance sheets. You might be managing and juggling accounting processes to ensure a smooth financial transition for your business. If your books are behind a few months, or even years, you are not alone—25% of business owners are behind on their books. Estimate your taxes now and you’ll have a clear financial picture moving forward into the new year. Such financial clarity is essential for accurate budgeting accounting. The end of the year is a golden opportunity to reconcile accounts, be it bank accounts, accounts payable, accounts receivable, business credit cards, etc.