The end of the year is a time when most organizations close their books. Despite being critical to every business, preparing a year-end account can be an intimidating process.
However, this article will show you 7 essential pieces of information that’ll help you take control of your year-end accounting process and prepare you for the new year.
Hiring Tax Accountant Services Is Critical
While your in-house accounting department can do your year-end accounting, you can be assured of a more effective outcome when engaging with tax accountant services. Hiring accounting professionals will free up your time, allowing you to perform other relevant tasks.
The valuable insights these professionals offer can also help guide your business plans and enable you to make more strategic financial decisions. Additionally, having a fresh eye to audit your taxes can help you gain an objective view of your performance. Therefore, you can proactively streamline your systems to maximize profits.
Your Financial Statements Are Crucial
Financial records play a significant role during the compilation and analysis of year-end statements. Your financial statements can be regarded as your business’ lifeline. They give you a synopsis of your financial state by revealing your past and current finances.
Through your statements, you can also forecast a financial future for your business. Critical financial statements include your income statement, cash flow statement, and balance sheet. To have proper year-end accounting, you should ensure these statements are well prepared and readily available for each of your financial activities across the year.
Past Due Invoices Are Still Relevant
When preparing your year-end account, you should try to retrieve outstanding debts that your customers owe your business. Doing this might be challenging when past invoices are not available. However, having them handy lets you discover debtors after a brief cursory search.
With a simple invoice reminder, you can get some customers to settle their bills. However, others may require more effort to yield to your demands. The goal here is to ensure you don’t leave your money in the pockets of customers who have received your services. Getting your money back will help your accounting process be more comprehensive and further increase your financial strength for the new fiscal year.
Your Business Receipts Should Be Well Organized
If you’ve not given much attention to your business receipts, you may need to think twice regarding this, because receipts are essential business documents and must be tidied up for the new year. Having disorganized receipts puts you at risk of inaccurate records.
Moreover, bad records increase the chances of making errors on necessary documentation, such as business tax returns. Organizing your receipts saves you from making costly accounting mistakes. You may pay for things twice when you have no payment record or exclude such expenses from your account.
A way to organize your receipts is by sorting them according to the expenses they represent. You can also have your receipts in folders or stored on digital devices.
Budget And Outcome Comparison Is Essential
Business budgets help keep financial expenses in order. Aside from assisting you in allocating resources, a budget aligns your investments to expected outcomes. Comparing your budget with your outcome is essential while preparing a year-end account. When you compare your budget at the end of the previous year to the results you’ve achieved at the end of this year, you can tell how well you’ve fared.
More so, such a comparison will help you spot areas you spend more money in than planned and those you spent less. You can use this information as a guide while preparing your accounts for the coming year. This way, you can apportion resources more to tasks and operations appropriately.
An Inventory Of Your Assets Will Be Needed
As you end the year, it’s necessary to count the available materials and supplies accurately. This proves helpful in several ways.
First, it enables you to have correct records of business materials and supplies. Secondly, you can note the supplies you will need to make for the next year and materials you need to get off your shelves/store.
If you run an inventory-based business, ensure you complete an inventory check as the year ends. Compare the total inventory on hand to your balance sheets. By doing so, you can make adjustments to any misalignments and have your records straight.
Accounts Reconciliation Help You Maintain Balance
Accounts reconciliation forms a significant aspect of your year-end accounting. Ensure your accounting records tally with your bank accounts. To make this reconciliation, compare your bank statements to your accounting records. Ideally, both records should match, but if you observe a discrepancy, then you need to do some inspection and inquiry. You should locate the origin of the mismatch and guarantee the records are equally balanced.
Having a well-prepared year-end account is a significant business outcome. However, the process doesn’t always come easy. Nevertheless, by focusing on the essentials, you can achieve desirable results. The tips recommended in this article will enhance efficiency and save you time and effort without compromising accuracy in preparing your year-end accounting.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.