BYE BYE 2021
WE ARE AT THE END OF THE YEAR AND IT'S TIME TO CLOSE OUT THE BOOKS AND PREPARE FINANCIALS FOR TAX PURPOSES.
CLOSING THE BOOKS MEANS THAT ALL THE FINANCIAL TRANSACTIONS FOR THE YEARS ARE CATEGORIZED, RECONCILED AND PROPERLY REPORTED TO THE APPROPRIATE FEDERAL AND/OR STATE AUTHORITIES.
BELOW IS A QUICK CHECKLIST TO HELP YOU GET PREPARED:
INVOICE AND COLLECT
Invoice for all outstanding business. If you have aging invoices, call and/or send out reminders so that you can collect that income. If the invoice is over 90 days, you may need to write it off as bad debt if the customer is non-responsive.
2. PAY ALL BILLS
Pay all your outstanding financial obligations (i.e. contractor pay, employee wages, vendors, etc) so that you can take advantage of filing those expenses on your tax return (if applicable).
3. CATEGORIZE AND RECORD
Complete all bookkeeping tasks...categorize all transactions (income and expenses) so that you know the taxable income and the tax deductible expenses.
4. BANK RECONCILIATION
This process is done to make sure that the information in your bookkeeping software matches the information on the bank statements and credit card statements.
5. PAYROLL TAXES
Make sure your monthly and year-end payroll expenses are accurate. If doing it yourself make sure you have submitted payroll tax payments to the appropriate federal/state authorities. If using a payroll processing company, verify payments have been made.
6. VERIFY INFORMATION
Check all personnel files to make sure you have all mandatory forms completely filled out and signed. Also verify that the information is still accurate for your employees and contractors so you can properly submit 1099s and W2s.
7. INVENTORY CHECK
You need to do a final count of all inventory on the day you close your books. You will need your beginning inventory and ending inventory for your tax return.
8. FINANCIAL STATEMENTS
The Profit & Loss Statement, Balance Sheet and Cash Flow Statement will give an overview of the health of your business's financial position at the end of the year. The financials are needed to complete your tax return.