- Never wait until the last minute
One of the biggest mistakes that small business owners make is waiting until the last minute. While it may appear good for some, you need ample time to reconcile all accounts, complete W-2 forms, and much more. Start this early and avoid procrastination if you want things to move well. As the holiday season arrives, you will want to spend time with your family and not struggle with office work. Furthermore, with your team thinking of spending their time with their families, you need to start early enough so that you can finish on time.
- Collect financial statements
Before analyzing statements, you must reach out to your financial institutions and collect your financial statements and records. Although you can get some financial statements and records online, you may need some assistance getting records dating back to the beginning of your operations. This can only be obtained by visiting your financial institution in person. Once you have the audience with the bank, collect all information and statements that your accountant will need. This may include an income statement and a cash statement report.
- Organize purchase records and receipts
Upgrade your filing system by going through each paper one at a time and use a reliable document scanner to keep all files organized digitally. If you have no digital scanner, ensure you invest in one to keep away your worries about faded ink or damages that can be caused by water on old documents. With everything in a digitized form, you will eradicate concerns associated with manual filing systems and have a backup in case the paper documents are lost. If you must keep paper receipts, keep everything in one place in a filing cabinet.
- Itemize deductions
Even as you prepare to end your year in style, you must always think about the future and other financial days. One such day is Tax Day. Take stock of everything in your business that might impact operating expenses, such as your vehicle and home office. Even if you use your personal car for business, record the total number of miles you have driven, reasons for every trip you make, the cost of fuel, repairs and dates. Similarly, if you use your home office to carry out business, claim expenses such as rent, utilities and maintenance fees. You can seek the help of an accountant to calculate these deductions if you find it hard.
- Review balance sheet items
The balance sheet at the year-end shows a snapshot of the business. It highlights what your business is owed and what it owns. While it may not factor into what is filed on the tax return, it is still important to be a true reflection of the company’s position at the end of the year. Furthermore, review assets which consist of things you own, such as fixed bank accounts, fixed assets, equipment and inventory. Also, assess your liabilities, depreciation, payroll and other accruals, all of which are crucial for your end-year reporting.
