When companies are understaffed or putting their accounting to-dos on the back burner, they can make grievous errors when reporting their finances. Overstatement of expenses, revenue miscalculations, and inaccurate debt changes are some of the most prominent errors in companies at year-end. These mistakes can not only lead to potential financial fallout but also damage your reputation by labeling you as disorganized.
The growth of your company is hindered when these miscalculations and errors occur. These errors have significant implications on your general and payroll taxes which further lead you to pay costly penalties by the Internal Revenue Service (IRS). Establishing a solid year-end accounting to-do checklist will ensure that your business does not face any extreme circumstances that can hamper your reputation or burden you financially. Below are some of the guidelines to keep everything in order.
Monitor Internal Operations
The amount of control you have over the internal operations determines if your business will be able to maintain accurate bookkeeping records for the financial year. Look for minute errors. To do this, you must narrowly inspect each procedure that is currently implemented. Research has shown that businesses lose more than $100,000 annually due to internal errors. Therefore, your accounting to-do list should prioritize the efficiency of internal operations.
Properly File Payroll Taxes
Not properly filing payroll taxes can be a mistake any business can make. The IRS has hard and fast rules when filing taxes related to employee payroll since it is not your money. The IRS considers that you are only acting as a caretaker for the money until it is paid to the IRS. Likewise, the end of the fiscal year is a critical time for your employees because they expect increments and promotions. Giving them bonuses along with their payroll motivates them, which will ultimately be reflected in their performance.
Collect Receivables
Research shows that 29% of start-ups fail due to a cash crisis. Therefore, your accounting year-end to-do list must focus on collecting all the accounts receivables, which will then reflect positively on your balance sheet. You may have to push your clients to pay their remaining invoices as soon as possible so that you can clean up any reconciliation issues. Maintaining control over the cash flow of your company is vital.
Conform with the GAAP
If your books reconcile and everything is clearly documented according to GAAP principles, you will build trust with your investors and clients. This is something you must consistently follow all year long. If you have not, then consulting with a professional accountant or bookkeeper must be on your accounting to-do list. Doing everything according to the rules will ensure that your company stays out of trouble with the IRS.
Plan for Income Tax
Developing your checklist is an important time for you to identify your tax needs and hire a professional so you can minimize your tax payments and maintain compliance. Many small businesses do not consider tax preparations to be a significant task and end up paying fines and penalties as a result. Although you inevitably have quite a few things on your plate, filing your tax returns is not something to be ignored. Keeping your business out of trouble is important to pursue your business goals and objectives successfully.
Budget for the Future
Most small businesses fail because they run out of cash. This happens because they have not planned enough in advance to hire new staff, buy new equipment, or other unexpected expenses. Your year-end accounting to-do list must include your budget for the upcoming year. With assistance from all your stakeholders, compile a budget so your business stays out of trouble, and all of your plans to expand and grow your business can be realized comfortably.
Review
The end of the year is always a time is filled with many tasks that need to be completed urgently. However, this sense of urgency cannot dissuade you from reviewing the performance of the previous year. All successful companies in the world set measurable benchmarks that can be tracked and reviewed instantly at year-end. Your accounting to-do list must implement certain measures to ensure that all objectives are being met, allowing you to plan for the upcoming fiscal year.
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