The end of the year can be a busy time for bookkeepers and bookkeeping services providers. Although the majority pf bookkeeping tasks are performed all year long, there are a few additional responsibilities that must be fulfilled as the business year comes to a close. These extra bookkeeping duties, which include evaluating the status of accounts receivable, taking an accurate inventory, preparing annual financial statements and getting the books ready to generate 1099s and W-2s, are essential to transitioning a business into a new year. Without the data provided by these year-end bookkeeping chores, a business has no means of evaluating its financial health and planning effectively for the year to come.
The following are a few critical bookkeeping tasks that must be performed as the year comes to a close:
1) Evaluate the status of past due accounts receivable.
Since accounts receivable contribute to the calculation of business profitability, they are an essential consideration in determining the year-end financial health of a business. One of the important tasks in closing out the books at the end of the year is identifying past due accounts receivable and evaluating the likelihood of collecting the balance due from the party responsible for incurring the charge. If it is determined that collection is unlikely, the outstanding balance can be written off as a business loss and used as such for tax purposes.
2) Take an accurate physical inventory.
One very obvious task that must be completed by the bookkeeping arm of a business as the year comes to an end is taking an accurate physical inventory. Since inventory is an asset, it figures into calculations of profitability and loss and is an important element of business tax preparation. An overstated inventory automatically results in the payment of excess taxes, highlighting one of the important reasons why taking an accurate inventory at the end of the tax year is a necessary antecedent to the preparation of the business tax return.
3) Produce required financial reports.
In addition to being necessary for the preparation of business tax returns, financial statements are an essential prerequisite for determining the overall financial health of a business. These formal reports, which include statements of equity, income and cash flow, provide business owners and with the information that is necessary for tax preparation, long range tax planning and making informed decisions about asset allocation and business operations. In addition, Equity Statements and Statements of Financial Position, are an important component of the decision-making process for potential lenders and investors.
4) Prepare to generate tax forms.
Although 1099s and W-2s are not issued until after the first of the year, all of the income and tax data that is to be reported must be complied before the year comes to a close. Both W-2s, which must be mailed to employees before the end of January, and 1099s, which must be filed before the end of February, require accurate tax and income data from the previous year. This being the case, bringing company books up to date and compiling the financial information required by these forms is an important and necessary end-of-the-year bookkeeping task.
Although internal bookkeepers and bookkeeping services providers perform a key business function all year long, their work is especially important as the business year comes to an end. During the month of December, bookkeepers everywhere are hard at work taking inventory, collecting data and generating year-end reports, all aimed at moving the businesses they serve seamlessly and efficiently into the coming year.
The licensed accountants and bookkeepers at Las Vegas Bookkeeping have the knowledge and expertise to help your business run smoothly and efficiently. To learn more about the services we provide, visit us at www.lasvegasbookkeeping.com. Contact us by phone at (702)945-2757 or by email at firstname.lastname@example.org to receive a free, no obligation consultation. Don't wait! Streamline your business operations today by contacting the professionals at Las Vegas Bookkeeping today.