How to Do Year-End Accounting Properly
For most businesses, the end of the year doesn’t just signal new beginnings and cliché “new year, new me” statements. It’s also the time when most accounting departments scramble to put together their financial reports.
But how do you do your year-end accounting properly, anyway?
Before the next fiscal year begins, you’ll need to see if you meet all the items in this checklist so you can be ready for the transition.
Collate all your financial statements
Your financial advisors will likely tell you to gather all your financial information so you can analyze them thoroughly.
It would be great if you have corporate secretaries already doing this for you so it’s less work on your part. Still, it’s something that’s doable as long as you keep track of what goes on in all your business accounts.
So, collate all your corporate credit card statements for the year as part of your income statement along with your balance sheet and cash flow statement. All of these can already show you at a glance how your company is doing financially.
Collect all the money owed to you
The great thing about a reliable bookkeeping system (or outsourced agency) is that you can easily see all your past-due invoices. So if clients and other entities still owe you money, there’s no time like the present to start collecting them.
Before resorting to hiring debt collectors, you can set up an invoice reminder system for the people who owe your business. But first, you have to document and collate all proof of their debts to show them.
Then have your accountant or bookkeeper get in touch with them and offer payment options along with a timeline and documentation of payment proof. This is the professional yet firm way to do so.
Do an inventory of your supplies and materials
Whether you set up a home office or are renting office space, you’ll need to account for inventory properly. All the office supplies and materials you use are still considered inventory that have bearing on your balance sheet.
This can help you determine if you spent an astronomical amount on certain things like staples or Post-It notes. It’s the best time to adjust certain discrepancies you’ll discover, too.
Doing this makes inventory for the following fiscal year more organized and a lot easier. You can also easily compare the prices and value of certain supplies just in case they change in the future.
Back up all your accounting information
The work doesn’t stop after reconciling bank accounts and reviewing all accounts payable and receivable, though. Most companies neglect to do this important step, much to their frustration when the worst-case scenario happens.
Don’t forget to back up all your accounting data and information just in case you lose hard copies of your statements and balance sheets.
You can always rely on reputable IT companies for data recovery services in case the unthinkable happens. But it’s still a good idea to invest in secure and ample cloud storage and to keep both soft and hard copies of different fiscal years.