Year-end is just around the corner, and that means a couple of administrative tasks are necessary to take care of bookkeeping and tax chores. Here are a couple of tips to make year-end go smoother.
Cleaning up
Things will go a lot smoother if you reach out to your vendors and employees and get their help to update your records.
- Send a notice to all
employees, asking them to verify their address so they will get their W-2s
without delay.
- Make sure you have the
right information for vendors that you need to produce a 1099 for. Before
you pay your vendors more than $600 in one year, ask them for a W-9 so
that you have a current address and taxpayer ID number on file.
- Check to make sure you
have any sales tax exemption certificates from vendors that you are not
charging sales tax to.
It's also time to clean up any account balances that need to
be reclassified or corrected.
- Any clearing accounts,
such as undeposited funds, should be zero.
- Bank reconciliations
should be caught up and book balances should match the bank or be
explained.
- Inventory should be
adjusted to reflect accurate quantities.
- Loan balances should be
adjusted to correctly reflect interest and principal allocations.
- Depreciation entries
should be made.
- Any bad debts that aren't
expected to be collected can be written off.
- Any inventory that is not
saleable or worth less than you paid for it can be adjusted on your books.
- For cash basis taxpayers,
pay any large bills before year-end if you have excess profits.
- Pay employee bonuses prior
to year-end.
Getting organized
Create a place in your home or office or a special file on your computer to store tax-related documents, such as W-2s, brokerage statements, and tax returns. Convert them to PDF format if they are not already, and upload them to your accountant's secure client portal as you get them.
With all this great preparation, you'll find tax season easier than ever and a chore that you can mark off your to-do list early.