At the end of the year, accounting is one of the most challenging parts for any small business owner. Closing the books at the year-end can be a very intimidating process.
Year-end accounting is significant for any business owner to ensure that your financial transactions are up-to-date and recorded correctly. It will give you a balance and a close look at your yearly expenses. An accurate report is what makes a stabilized financial statement. The most important part is to sort out any minor or significant errors in the bookkeeping.
With the year-end closing of financial statements, you can prepare for taxation time.
These steps will help you to close the budget year more efficiently.
Entry in Proper General Ledger
The essential priority every bookkeeper should practice is transferring every journal entry in the available catalog. Keep the year’s expenses accounted in the journal concerning every cash receipt and invoice to close the books. Every payment made yearly via cash, check, or electronic funds transfer should be in your yearly books. Every inflow and outflow should be in the accounts journal.
Bills Payment
Paying bills on time in year-end accounting is vital in proper accounts management. All the bills that were due should be paid before the year-end. Primarily, you should deliver the big numbers on time. Check your records and ensure how much you owe from any external vendor’s job.
Calculate General Ledger Totals
To ensure how much you spent and how much you have earned, work out the total for each account by adding up all your entries. You will give your preliminary ending balances.
Perform Variance Analysis
Track monthly expenses against your planned budget can save you a lot. Tracking a company’s financial health with the analysis of planned budget and spending is one of the standard methods of the year-end expense report. Variance analysis is a traditional method for doing this. Your information and yearly expense track will help compare and analyze profit and loss. An accountant is essential to perform this analysis and prepare the variance report.
Financial Statements
Your debits and credits are equal. Then, you can prepare your balance sheet profit and loss and cash flow statement. Financial information will help in understanding your business expenditure.
To check on tax information, you must ensure that your tax liabilities match the payroll returns. Keep an expert accountant to do the job. Do check tax information that is relevant to your business. Make sure to keep yourself updated before the tax time.
Inventory and Report
Assets and stock also need to be checked at the year-end. You will need this information at the start of next year to know how much you are starting. As for your reports, use essential accounting software to run an income statement and balance sheet report. Use an affordable accounting program that you can run on your computer. It would make your job much easier.
Categorization of Business Expenses
The end of the year is one of the best times to catch up on past payments you have missed. Ensure that all past expenses, big or small, are categorized in your accounting software.
Recording expenses will create an efficient report, help the accountant review, and produce the most efficient financial information.
Double-Check
After closure, it is time to recheck the work on your financial books. There should be no unnoticed errors to cost you any extra money.
An accountant usually closes financial books. Any small business owner can take the task into their hands using accounting software. The study is more accessible for small companies because of fewer monthly transactions. Even if your accountant is closing your books, the basic understanding will help you know what to expect from them. Closing the books may sound daunting. So, utilizing technology is one of the best options so far.
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