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Checklist for Closing Your Books at Year-End
It's that time of year again! Fiscal year-end is approaching, which means it's time to close the books. For many businesses, this is a time-consuming and daunting process.
It's that time of year again! Fiscal year-end is approaching, which means it's time to close the books. For many businesses, this is a time-consuming and daunting process. However, it doesn't have to be. By following this checklist, you can ensure that your books are properly closed and that your financial statements are accurately prepared.
First, let's take a look at why it's important to close the books. Closing the books means taking a snapshot of your financial transactions as of a specific date. This allows you to prepare accurate financial statements for your business. It also allows you to see how your business has performed over the course of the year and identify any areas where you may have made a profit or loss. Additionally, closing the books enables you to file your taxes accurately and on time.
Now that we've covered why it's important to close the books, let's take a look at the steps you need to take in order to do so correctly.
Before you close your books you want to ensure you have collected all invoices that are outstanding. Collect payments as soon as possible to give you the time necessary to update your books before the end of the year.
Contractors, Vendors, Employees, and other Bills
Once you have ensured that all of your invoices have been collected, you want to take a look at any outstanding invoices that you have that are outstanding to your vendors. Record the expenses appropriately.
Employee & Independent Contractor Information
Make sure that you have all the correct information for your employees and independent contractors. This includes their full name, mailing address, Social Security Number or Individual Taxpayer Identification Number (ITIN), date of birth, W-4s and W-9s. . You will need this information in order to prepare accurate W-2s and 1099s at the end of the year.
Income & Expenses
Now you want to take a look at all of your income and expenses for the year. This will include recording any final sales, reviewing your bank statements, and categorizing all of your transactions. This is also a good time to reconcile your books with your bank statements.
Assets & Liabilities
Next, you want to take a look at your assets and liabilities. This includes reviewing your inventory levels, recording any depreciation of assets, and updating your balance sheet.
Finally, you want to prepare your financial statements for the year. This will include your income statement, balance sheet, and cash flow statement. Make sure to review your statements for accuracy and completeness before you close your books for the year.
By following this checklist, you can ensure that your bookkeeping is up-to-date and that your financial statements are accurate. So don't wait until the last minute - start closing your books today.
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