How do you prepare for your fiscal year-end? Every business has one and they don’t all end with the calendar year. If you are the type of business that has a month-end process each month or even a quarter-end process you are on your way to a smoother year-end. If you have investor or bank requirements for monthly or quarterly financial statements you will already have a process in place.
One of the first places to start in a month or year-end process is with the bank reconciliation. Reconciling your monthly bank statements to your general ledger in your financial accounting software will help you to ensure all items that have cleared your bank have been properly accounted for. Any methods for payment including all bank accounts, personal cash payments, credit card payments, payments from other companies you may have all need to be reconciled to process all expenses to your company general ledger.
Outstanding Accounts Receivable will need to be reviewed for accuracy to ensure all payments received have been applied against invoices. Year-end is the perfect time to review customer accounts and recognize uncollectible accounts, incorrect invoicing, and to clean up the accounts receivable so the new fiscal year starts fresh.
When preparing your year-end to give to your Tax Accountant you should supply backup for any balance sheet accounts. Once your bank account is reconciled you will provide a copy of the bank reconciliation in your year-end file. The dollar amount reported on your financial statements for your Fixed Assets like Furniture should have an invoice to back up/verify the amount on your financial statements. By preparing a file for year-end with all your working papers – document verifications/invoices you will save your accountant time in trying to locate something to substantiate your numbers.
Preparing backup verification files for all Assets listed and a file for all Liabilities listed on your financial statements will help your year-end process run smoother. As with your Accounts Receivable this would be a good time to clean up your Outstanding Accounts Payable. Ensure you have entered all the invoices you know should be expensed in the fiscal year and if you are missing some invoices call your suppliers and get copies. Provide copies of invoices to verify the Outstanding Accounts Payable for any large dollar invoices as well as an AP listing to verify what makes up the amount on the balance sheet. For any unpaid over 90 days invoices that may be in dispute provide this information to your accountant.
Year-end is also a great time to visually scan all expense accounts to ensure no expenses were double posted or posted incorrectly. Reviewing payroll, tax remittances, contracts etc can be part of the process to ensure all internal procedures are being followed. Year-end is the time to clean up and take care of loose ends and to make sure you have accounted properly for your sales and expenses. This is your time to get a good look at what you have accomplished for the year and to move forward with changes in the New Year.