Just two months remain on the 2012 calendar. And you know what that means, right? Aside from the ensuing blitz of holiday marketeering, it means decision and action time for small business owners—and their advisors—whose fiscal years mirror the calendar. From retirement contributions to equipment purchases to tracking down contractor tax forms, there’s plenty for business owners to consider when it comes to end-of-year finances.
Counting Down To Year End
To help, we tapped a handful of accounting experts (including our own in-house CPA, Sandra Tomlinson) to offer a few tips.
- Reconciliations. There are specific reconciliations that should be done before year-end and then rolled forward to include year-end. These are necessary to ensure that transactions have been recorded correctly. Reconciliation examples include Bank to Books, Aged Accounts Payable balance to Accounts Payable balance on the Balance Sheet, Aged Accounts Receivable balance to Accounts Receivable balance on the Balance Sheet, and Undeposited funds on the Balance sheet to checks not deposited in the bank account.
- Make sure that interest on loans is recorded correctly. Many business owners will apply their entire loan payment against the loan balance, but in reality, a part of each payment should be interest expense. That needs to be adjusted so they don’t miss out on a valuable tax deduction.
- Research old outstanding checks to see if you need to void and reissue them so they can be cashed by the vendor. There are some governments who have the right to claim them as abandoned property (escheat laws) after a period of time so you want to get them resolved before the end of that period.
- Try one more time to collect on old outstanding invoices. If it’s impossible to collect, you may be able to write off the bad debt and get a tax deduction.
Sandra Tomlinson, CPA, Kashoo Accounting Expert (if you’ve ever contacted Kashoo customer support, you probably know Sandra!)
- When it comes to selecting a tax accountant, plan early! Finding a good tax accountant during tax season is like making reservations at a restaurant Valentine’s Day morning. The best ones might already be booked up.
- Learn from your mistakes. While you’re getting ready to wrap up the year, look for weaknesses in your current system. Not happy with your online accounting software? Didn’t spend enough on advertising? Make a list of trouble spots, and make a plan to improve them this year.
Eric Matthews, ThatBookkeeper.com