It's December already and it's that time of the year,when we close our Books and get ready for the Tax Period.
Are you ready for Year End Closings? Do you know what you will need to carry out special Bookkeeping tasks,to see you through this period?
Do not worry,We are here to help you,get over the Year End hassles,so that you can be ready for Tax filing on time.
We have listed out, Special Bookkeeping tasks,that you need to put in place as you approach year end; once you do this,you are assured of a smooth transition into the new Accounting Year :
- CHECKING YOUR CUSTOMER ACCOUNTS:As you prepare your Books for the end of the 2012 Accounting Cycle,you will need to review your Customer Accounts.This is done by going through your Accounts Receivables,when you do this,you are monitoring customers that are owing you,so that they can pay you your outstanding balances before the end of he year.This is also a good time to review customer Accounts for possible Bad Debt Expense.In addition,this is the time to be more critical of past due Accounts.Remember,that you can use any Bad Debt to reduce your taxes,so if you believe that a customer is not likely to keep up his promise on a Past due Account,it is advisable to write off the loss.
- ASSESSING VENDOR ACCOUNTS:The end of 2012 Accounting Period is the perfect time to review your Vendor Accounts,to be sure that they are all paid in full and ready for the new cycle.You also have to ensure that you have entered ino your Vendor Accounts,any bills that reflect your Business Activity in the period being closed,otherwise expenses from the period may not show up in the appropriate year end financial statements. For instance,Make Sure that you review outstanding Purchase Orders,to be sure that your vendor accounts are not missing orders,that have been completed,but have not been billed in your Books.You have to record the bill in December to reflect the receipt of the inventory during the Tax Year,even if the vendor will not bill you,for that inventory until January.
- REMOVING INACTIVE ACCOUNTS: The Closing process is a good time to assess all open Accounts and verify that you still need them.If an Account has no transactions in it,you are free to remove it at this time.However,it is advisable to make a list of the Accounts,that you need removed during the year,so that at year end,you will delete all inactive accounts.You have to ensure that there are no transactions entered into any of these Account.
- PROCESSING 1099S & W-2S FOR VENDORS/STAFFS:At the end of each year end,you must prepare,print and send IRS Form 1099 to your vendors,as well as W-2s to your staffs,not later than January 31st.Use 1099-Misc to report payments made to vendors,who performed business related services for your company.Remember that if total annual payments to the vendor do not equal or exceed $600,you are not required to prepare a form 1099-Misc to that vendor.
- TRACK YOUR LOANS:If your Business takes out a loan,you should have set up long-term liability account to track it,during the year end,you will have to ensure that the payments,that you have been making towards the loan were correctly split between Principal and Interest,so that you are sure of proper and accurate recording.
- TRACK YOUR FIXED ASSETS:When you purchase Office Equipments,Buildings,Computers,Vehicles or other Assets that have useful lives of more than 1 Year,you will need to add them to your Balance Sheet and record a depreciation of the Assets periodically.
- RECONCILIATIONS: It is important to ensure that you reconcile all Cash,Loans,Credit Lines and Credit Card Accounts with the Statements and also file and keep Reconciliation Reports.
- RUN REPORTS: Lastly,you have to ensure that you have an ending inventory Balance for your year end period,obtain your principal balance of loans and interest payments for the year end from your Bank; Get your Bank reconciliation reports and verify their accuracy to the books.Enter adjusting entries as necessary and ensure that the balances on your books corresponds to what you have in your source documents.
We know that these tips have helped you and as you are ready to proceed with your year end steps,We are happy to inform you that we are available to help you prepare adequately for Year End and ultimately get you ready for taxes.
We would love to hear from you.