15 Dec How to help Your Business End 2020 In top Form
For most small businesses, year-end is a time of panic, it tends to be the busiest part of the year, and there are countless tasks you need to take care of – sending customer statements, reconciling bank accounts, preparing financial documents, filing taxes, and more.
Without a proper system in place, your books might not be in order, and you could very well miss out on a few payments, or your reports could be filled with errors,
However, if you are the proactive sort, you may have been performing these year-end tasks on a daily, monthly or even quarterly basis, which can certainly lighten the load for year-end.
We are going to give you a few essential guidelines for closing your books at the end of the year;
Complete all invoicing.
Make sure you send statements to all of your customers and remind them of their outstanding payments, be sure to check if you have any open sales rrders or active projects that are still to be billed and send out invoices for them.
Follow up on outstanding payments.
Throughout the year, it is imperative to keep sending reminders to your customers who have not yet paid you so you can stay on top of your cashflow. If you are able to set up automatic reminders, you can save yourself a lot of the last-minute stress that comes with following up and chasing payments.
As your year draws to a close, make sure that you deal with any payments that you have not yet received.
Write off overdue invoices.
Unfortunately, but not all of your clients are going to pay you. Such is life! If you think that a customer is never going to pay you, you need to have prepared your company to be able to write these invoices off as bad debt.
Make sure that you have waited a decent amount of time before writing an invoice off (most often this would be six months from the due date), You can send them one last final reminder, on the off chance, and if you don’t get a response from them, it is best to just write off these overdue invoices.
Record your expenses.
Make sure you have recorded all bills from your vendors. If you have incurred business expenses, try and keep track of these separately as you can claim tax deductions on them.
Evaluate your inventory.
If there has been a drop in the market value of your inventory, you might be able to claim additional deductions. Now is the time for stocktake, to see how many of your items are obsolete or perhaps no longer in sellable condition. You will need to make sure that your physical stock numbers match the inventory numbers in your books. Don’t forget you will still need to keep track of items that you don’t sell any longer and write them off. You will also need to account for depreciation on your fixed assets and record this depreciation.
Reconcile your bank statements.
Doing a Reconciliation can help to identify discrepancies, bank errors, or any fraudulent activity that has happened as well as letting you know what transactions that have been authorised that have not yet cleared the account (uncashed checks) Categorise and match the transactions that are fetched from your bank feeds.
Make sure that all your invoices and bills agree with the transactions in your bank statement. Note to self -Keep a beady eye out for any cancelled or checks that have not cleared as they can mess up your accounts at crucial moments during your year-end closing.
Review your yearly reports.
Your profit and loss statement is the report that tells you how much you have spent and how much you have earned. Try comparing the current year’s report with the previous year’s to see if your business is doing well. Analyse your cash flow to understand where your money is being spent and where it is coming from, then use this information to predict a trend in your future cash flow, which will help you with your budgeting for the upcoming year.
Once all is said and done, send your accountant your financial reports so they can review your finances and help you plan for the next year.
What do you need to send your accountant?
- Make sure that you have everything you need ready to go before submitting your documents.
- Financial Statements: Profit & Loss, Cashflow, and Balance Sheet
- Inventory listing
- List of capital assets activity
- Bank and credit card statements
- Vehicle logs (to apply mileage deductions)
- You may be required to submit other documents depending on your business. Talk to your accountant to get a complete list of any supplementary papers that need to be sent.
We hope these tips will help you have a successful year-end closing. If you have completed all these, WELL DONE, (give em a bell’s) you deserve a pat on your back, and you are all set for next year.