The end of year 2016 is just around the corner, and it’s time to prepare your books in readiness for tax reporting by the tax preparer. But do you know how to prepare your books for that? To help you perform your 2016 year-end bookkeeping tasks effectively, here is a guide to keep you on the right track.
1. Do bank account reconciliations
It’s time to verify all the transactions posted into your accounting software or books. Check whether the balance in the general ledger or QuickBooks matches the balance in your bank statements. If not, check for errors or wrong postings and correct them early.
2. Follow up on collections
Call up customers who owe you money and remind them it’s time to pay up. Now is the perfect time to collect your receivables and also review whether there are some receivables you won’t likely to be able to collect. You can write them off or send them to a collection agency.
3. Review your inventory
Inventory review before year-end is highly critical. You do not want to be overstating your inventory balance and paying extra taxes you don’t owe. Verify that the inventory is properly reported on the balance sheet. Also ensure that it’s properly valued. Remember, your tax preparer will ask for the following to file your tax return;
- Opening inventory (inventory s at 1st January)
- Cost of inventory purchased all year
- Amount of inventory sold during the year
- Closing inventory (inventory as at 31st December)
4. Fixed assets status
Are all the fixed assets such as automobiles and equipment reported on the balance sheet? Including those purchased during the year? Has there been a sale or disposal of assets? Is it accounted for? Also, have you verified the depreciation on your fixed assets?
5. Expenses and accounts payable
Ensure that all your accounts payables are well recorded in the accounting software. As a small business, contact us to let you know of the various charges, such as internet and cell phone charges, that are deductible on your tax return. This can save you some significant bucks.
6. Collect the W-9’s
Now is the right time to collect W-9’s from vendors and contractors whom you paid over $600 to during the calendar year. Remember that the 1099’s are due on the 31st of January so now is the right time to order for them.
7. Have a detailed check of your Profit and Loss statement
Double check your profit and loss statement (Income statement) to ensure that all the numbers reported there make sense. Compare the statement with those of previous years and against your budget to see the trend. Ensure that there is no other additional income or expenses you are missing. If you find any, make the necessary adjustments.
If you encounter any hitch, do not hesitate to contact us right away for professional guidance. Our services come second to none in delivering professional, customized Bookkeeping and Accounting services in Charlotte, NC.