With the end of 2020 fast approaching, it’s not a bad idea to start preparing for your year-end reporting needs. Preparing year-end financial statements not only satisfies your accountant; the process also provides you with a picture of what this year has been like from a financial standpoint. For many, that picture may be a little out of focus. But putting together year-end financials helps you see where the gaps are and where you need to go next year.
Here’s Where to Start
Keeping financial records in order is critical to the success of your business. Here are a few things you can start on now to get ready for the end of the year accounting process.
Reconcile your bank and credit card statements. If you’re the type who doesn’t reconcile anything until forced to, you might want to start gathering bank and credit card statements now. Categorize all your expenditures, and review all statements to make sure there are no unauthorized purchases or withdrawals. This can be a time-consuming task, and starting on it now will give you plenty of time to get it done by the end of the year.
Gather W-9s from vendors and contractors. You’ll need to send 1099s to all your vendors and contractors next January. To do that, you’ll need to have a W-9 on file for everyone to whom you’ve paid $600 or more. If you don’t already have W-9s on file for everyone – or you’re missing a few – reach out to vendors and contractors now; it may take them a while to get back to you. Your accountant will need these W-9s so that he or she can send 1099s out early next year. You may be liable for penalties if you skip this step.
Review your profit and loss statements. Although the year isn’t quite over, it’s still a good time to review your profit and loss statements to see where you stand. Look for variances in income or expenses that may need more research. Now is the time to start on that. You can also extrapolate the numbers to get a good idea of where the business will end up for the year. If the numbers don’t look good, there may not be much you can do at this point, but at least everything will be in order by year-end, and you’ll be prepared at tax time.
Review accounts payable, accounts receivable, and aging invoices. How much money do you owe others? And how much do others owe you? Do you have any invoices that appear to be uncollectible? And have you invoiced everyone for all products or services? This is the time to make sure nothing has fallen through the cracks during the year.
Review estimated tax payments. Go over your estimated tax payments so that you know how much you’ve paid to date. Will you need to make adjustments for the last payment of the year? Your accountant can help you figure this out.
Adams Accounting Solutions Helps Clients Prepare for Year-End
When you’re working on year-end planning, it’s always a good idea to get professionals involved. Adams Accounting Solutions specializes in small business tax preparation and year-end accounting. Give us a call today for help getting your financials in order for 2020.
