The end of the year is upon us, and it is time to get organized with your accounting records. If you talk to your CPA, he/she would highly recommend getting on a robust accounting system for your business. Leave the Excel spreadsheets alone!
This is not an exhaustive list, but an outline of what you need to prepare for the end of the year
Enter final transactions for the year
- Review tax form (1040-Schedule C) from prior year and compare to this year’s expenses
- Enter ALL cash receipts for business expenses (taxis, business meals,subway, train)
- Reconcile all your accounts and enter any missing transactions
- Work on reducing receivables (Follow up with clients/customers to get paid)
- Write-off bad debt if necessary, but work on getting paid first
- Make SEP IRA or 401K contributions and donations to charity to reduce taxable income
- Make all asset depreciation entries (only applicable for equipment that you had put on a depreciation schedule)
Organize: Make Life Easier on Your CPA and Understand What Happened During The Year
- Organize receipts and statements for expenses that will be itemized on your Schedule C/1040
- Review your budget and compare actual to budget which will help develop 2008 budget
- Inquire from your CPA as to what reports and documentation is needed for tax preparation
- Ask if year-end reports should be on a cash basis or accrual basis
- Print out a copy of general ledger
- Back up the Quickbooks file in case of any data loss
- Send a copy of your Income Statement and Balance Sheet to your accountant at the end year to get an idea what your taxes will be in March 15 (quarterly tax payment) and/or April (personal income tax deadline
- Order 1099-MISC forms (Independent Contractors) and W-2 forms (Payroll Employees) early. The forms are much cheaper if buy at Staples then via Quickbooks.
- Get Independent Contractors and Employees current mailing address, SSN and the total payments made to them for the year.