Running a small business is no easy feat, and as we come to the end of yet another fiscal year, there are a lot of tasks that need to be done in order to wrap up the year smoothly. While it can seem quite daunting, we’re here to help. In this blog, we’ll provide small business owners with tips on how to close their books, reconcile their accounts, and prepare their financial statements at year-end. These tasks are essential for accurate record-keeping and keeping your business organized so let’s dive into some of the most important steps you should take.
Reconcile all accounts
The first step towards wrapping up your fiscal year is to reconcile all of your accounts. This includes your bank accounts, credit cards, and any other accounts you may have, so be thorough. You should compare the balances on your accounts to the balances shown on your statements, and ensure that all your bookkeeping is up to date and accurate. This is essential for understanding the financial health of your business and ensuring that you don’t run into any issues at tax time.
Verify your financial statements
Your next step is to prepare and verify your financial statements. This includes your balance sheet, income statement, and cash flow statement, which should all be accurate and up to date. This information is used to evaluate the overall performance and profitability of your business, so it’s important that it is accurate and trustworthy. If you are unsure about how to prepare these statements or would like assistance, speak to your accountant or bookkeeper.
Review your year-end inventory
If your business involves selling physical products, then you will also need to review your year-end inventory. If you track your inventory using accounting software, this process will be quite simple. However, if you have not been keeping up to date with your inventory, you may need to conduct a physical inventory count to ensure your records match your actual inventory levels.
Properly categorize expenses
It’s important to ensure that all expenses throughout the year are properly categorized, as this information is used to determine your business’s taxable income. You should ensure that all expenses are allocated to the appropriate accounts (such as office expenses, travel expenses, wages, etc.), and that you have supporting documentation for any and all expenses exceeding $50. Having this documentation ready will be useful in case of an audit or any other discrepancies.
Plan ahead for the next fiscal year
Don’t wait until the last minute to start planning for the next fiscal year. This includes budgeting, setting financial goals, and of course, preparing for tax season. Make sure everything is organized and in order to streamline the process.
Wrapping up the fiscal year for your small business is an essential task that cannot be overlooked. It can be overwhelming, but if you follow the above tips, you’ll be well on your way to a successful year-end close. By being thorough and paying attention to the details, you can ensure that your business’s financial records are kept in order, and that your business is ready for the next fiscal year. Start your 2024 with efficiency by leveraging Sage AR Automation.