12/03/2024
It is tax time! Are you organized? As I complete the year-end reviews for 2023 for my clients, I have a check list that helps you to organize your business documents. This review helps creates a new plan for this year. Many businesses have faced critical challenges in these past three years that I now think this process is more important than ever. I have clients who have not only thrived but also expanded their businesses in these difficult times so a year end review keeps them on track with their goals and business planning.
Business review:
In our work together I want to know about your business and the daily work experience. What type of business do you have a and what kind of QuickBooks file do you need (online or Desktop)? I have found that with 3rd party app and website sales integration that these needs sometimes will change. What are your sales now and services that we can expand.? One of my clients sold the delivery and route sales part of the business prior to the pandemic and decided to go entirely with online sales. We were able to make the decision based on the year end reports broken out by segments – route sales and expenses vs. online sales and just in time inventory. They tripled their sales in 2020 and 2021.
Reconcile Accounts
• Reconciling bank and credit cards accounts to ensure that accounting transactions match bank and credit card statements. Are there transactions left from prior months still left as unreconciled? This monthly review also helps identify lost checks, lost deposits and unauthorized transactions. Also, this helps to detect and prevent excess/unjustified bank charges and ensures transactions are posted correctly by your bank.
• Reconcile prepaid insurance and payroll accrual account balances to be sure they are paid and up to date.
• Reconcile revenue accounts where point of sale applications is used to record income. (Square, PayPal and QB payments). One consistent banking issue I see are transactions that are doubled and fees that are not being recorded.
Monthly and year-end review:
• Review aged accounts payable balances.
• Review other current liabilities, including payroll and sales tax, to reconcile and or make timely adjustments.
• Confirm loan balances to record the split of principal and interest.
• Review owners draws vs. business transactions to confirm proper classification.
• Research and ensure proper accounting treatment of funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
• Collect W-9s for new vendors. Make sure this information is entered before they are paid. Review each vendor setup for any missing information such as email or phone numbers. I have found the QB portal to be very easy to use and I now suggest that all my clients use this feature.
• We will do a year-end physical inventory count. If you buy products then you need to sell it and count it. Do you have negative inventory? Why? An ongoing problem I see is that items are not being sold on a one-to-one basis. At year end we may to record necessary adjustments based on variances. What is the current value?
Balance Sheet Review
• A balance sheet gives you a snapshot of your business' financial condition at a specific moment in time. In addition, it helps you quickly get a handle on the financial strength and capabilities of your business.
• This analysis can identify and analyze trends, particularly accounts receivables. How much is over 90 days? You are not a cash cow or the piggy bank. Can you start being paid up front for service calls? Why are you still doing work for clients that don’t pay on time?
• Our review can determine if your business can expand or easily handle the normal financial ebbs and flows of revenues and expenses
Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors.
Income statement Review
• We review a comparative year by year Income statement. This will not only ensure proper classification of business income and expenses, but also confirm any gaps in recurring transactions or any abnormal expenses.
• We will review comparative reports to of variances between actual and budgeted numbers. Comparing budget and actuals also helps to analyze individual department or cost center performance to prepare proper allocations. For non-profit clients this is critical for grants and tracking donations.
IT & Back-up Files
• It is critical to keep backups of all important data on a flash drive or Dropbox file. Download all the important work papers, contacts, files, and reports to secure loss of data in case of any disasters or data breaches. it is very important to lock the accounting period to avoid any back-dated changes to accounting records. I have an IT group that I do work with on a continuing basis.
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