The holidays are here, and most small business owners are in the thick of what is for most the busiest time of the year. It’s easy to feel overwhelmed and move typical accounting tasks to the bottom of an already long to-do list. To help, we’ve compiled a list of ways to manage your accounting so you can enjoy the holiday season and start 2021 with ease.
DON’T WAIT. START NOW.
The best advice we can give any small business owner is not to put off until tomorrow what should be done today. Start preparing early. Do an inventory check and make sure your books are up-to-date.
TECHNOLOGY IS YOUR BEST FRIEND
Technology is not only the hottest gift during the holiday season but it could be your solution to keeping on top of your accounting tasks. Accounting platforms such as QuickBooks Online can help categorize business transactions in a single platform. Making it easier for you to keep a handle on your inventory and keep customers satisfied. You can also count on Loeffler Financial Group to keep track of your accounting and bookkeeping needs.
PREPARE FOR THE EXTRAS
Your employees work hard all year, reward them. Year end bonuses and zoom holiday parties are great ways to thank employees for all they do. Embrace the holiday festivities, but understand what needs to be done in order for everyone to have a happy new year. If you plan on providing year-end bonuses, make sure you document it accordingly. Research what the tax rate will be applied to the bonus and if you have questions, reach out to your tax accountant or payroll provider for assistance.
DEVELOP AN ORGANIZATION PLAN
The holidays are stressful. With the demands on inventory and working to keep up with customer demands, try to find a way to keep your business operations organized. Develop a plan that has clear guidelines that reference when invoices need to get paid, how to handle late fees, and inventory checks and balances. A great way to get started is to complete one accounting task each day; this will keep your to-do list from piling up and keep you up-to-date and organized as you finish up the holiday season.
ASK FOR HELP WHEN NEEDED
There is no shame in asking for help. Hiring during the holiday season is one of the best ways to handle the influx of customers your business is likely to see. Consider hiring an accounting firm to give yourself more time to focus on other areas of your business.
SO, WHY DOES ALL THIS MATTER?
Believe us when we say there is a reason we are so focused on numbers and financial statements this time of year. While you’re focusing on marketing campaigns and promotions, we understand that numbers matter, and without a vast understanding, those holiday campaigns and promotions can go unfunded.
Implementing the tips referenced above can not only prevent a massive headache at the beginning of 2021, but help you avoid accounting and bookkeeping issues during tax time. Not only will these tips help you keep your sanity during the holiday season, but they will also help you keep your eyes on your business! Contact Loeffler Financial Group today to learn how we can help your business grow!
717.393.7366 | info@loefflerfinancial.com
As 2020 comes to an end, companies across the country are working diligently to close out their books so that tax returns can be filed on time and you can review insight into the year’s performance. As work stacks up, it is easy to miss a step in this process, which could cost you time and money. Loeffler Financial Group has created a comprehensive checklist to help you adapt to your end of year closing process.
RECORD AND RECONCILE
This is the first step to ensure all transactions are up-to-date, and complete for the end-of-year close. This includes all current bills and invoices, even if they still need to be paid. Review all past documentation to make sure everything has been recorded and nothing is missing.
It’s vital to ensure all transactions you’ve recorded in your bookkeeping software match what’s on your bank and credit card statements. To do this, you will need to perform a bank reconciliation. Our QuickBooks staff member can help make completing this task less strenuous.
COLLECT W-9S
If you pay a vendor $600 or more for services, you may need to issue Form 1099-MISC. The information on this form is used to create the 1099s you will use to report the total amount paid to the IRS. Best practices state when hiring a contractor, freelancer, or vendor, it is always best to have them fill out a W-9S before beginning any work or issuing their first payment.
CHECK YOUR ACCOUNTS RECEIVABLE AND INVOICES
Reviewing your receivables regularly to make sure you’re getting paid is a good idea. Review your outstanding invoices and note whether the invoices are marked paid or not. Look into any missing invoices. Reviewing these invoices will provide you with a better understanding of where you stand, and let you know if some customers are behind in paying their invoices. Don’t be afraid to call them, and let them know their status – as you need to mark their invoices as paid to close the books.
PAYROLL ESSENTIALS
Verify all employee information before issuing Form W-2. A missing or incorrect name or Social Security number can lead to penalties. Make sure all paychecks from the year have been recorded. Be sure to include all payments for commissions and bonus pay.
Planning is essential when it comes to bonus payments. Lead time will ensure timely delivery and the opportunity to review the accuracy of the checks before the check date. Remember, a bonus will often push an employee’s pay into a higher tax bracket for that pay period. Consider the tax implications for the employee on a local, state, and federal level before running the bonus payroll.
CHECK WHAT’S IN HOUSE
Year-end inventory counts can be a significant undertaking. However, it can make things clear if there are problems, such as bad inventory management or errors in stock. If there’s a considerable discrepancy between the inventory count and your bookkeeping, it should be corrected promptly.
Once you’ve completed your inventory counts, and have reconciled your point-of-sale system, ask yourself, Is there any room for improvement? Can you make your counts more efficient? Record your thoughts, review them with your accountant, and apply them in the new year.
YEAR-END ACCRUALS
Accruals are adjustments for revenue that have been earned but not posted to the general ledger accounts, and expenses that have been incurred but are not posted to the general ledger accounts. Year-end accruals are adjusting entries to make sure revenue and costs are recorded in the correct fiscal year.
Record year-end accruals, if you are not already recording monthly depreciation, payroll, and payments made for services not yet received.
REVIEW YOUR FINANCIAL STATEMENTS
Once your bookkeeping is complete, it’s a good idea to look through your income statement and balance sheet – make sure everything appears correct. Look for dollar amounts that don’t seem to match. Catching these mistakes now can save you time and trouble later.
Remember to look for things like:
- Negative account balances
- Balances that differ (seem too high or too low)
- Substantial differences in last year’s account balances
LOCK THE PERIOD
It’s so easy to type in a wrong date, especially when January hits, and you have to type 2021 and not 2020. Remember, numbers are the single source of truth for every business, providing your results and how your company is performing. If you are continuing to change things after the fact, you won’t have a good handle on how your business is performing.
NEXT STEPS
Don’t be overwhelmed if you are not ticking all of these boxes. Take it one step at a time, and work through these tasks. If you’re still confused on where to start, reach out to our team of accounting experts at Loeffler Financial Group to help you make sense of your accounting and year-end. We’re here for you!
717.393.7366 | info@loefflerfinancial.com