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As a business owner, there are some practical steps you can take to get your business off on the right foot going into the new year. Among those items, this year-end bookkeeping checklist can help take the pain out of accounting and maximize your efficiency.

What is the relationship between bookkeeping and accounting?

Many of the business owners we talk to use bookkeeping and accounting interchangeably. And while the two task are related, they each serve a different function in terms of your business’ overall financial health. Bookkeeping is the act of keeping accurate financial records. Accounting is the act of analyzing data to inform business decisions and reporting for things like taxes. You can see why good accounting is dependent on the quality of bookkeeping — accounting processes can only be as effective as the records (bookkeeping) they are based on.

So, whether you will be meeting with an accountant at the end of the year or trying to make the best of accounting for yourself in the coming year, do yourself a favor and follow this year-end bookkeeping checklist to ensure that when you start off next year, you and your business have all the benefits of effective bookkeeping.  

Year-end bookkeeping checklist

Reconcile the books

Now is the time to ensure that all of your bank statements, credit card statements, accounts like PayPal and internal paperwork are all simpatico. While the is a step that should be taken every month for good bookkeeping and accounting practices, even the most well-intentioned business owners have been known to fall behind from time to time. Ensuring that your documents match up now is much better than trying to account for any potential discrepancies months or years from now.

bookkeeping checklist

Review Assets

Update fixed-asset records and record depreciation, including any office equipment or buildings you may own. Account for any new assets you accumulated over the course of the year, including receipts detailing how much you invested in the item. This will be pertinent information when it comes time to file your taxes and you want to have it in easy reach to ensure that you maximize your potential tax benefits. This element of the year-end bookkeeping checklist confuses a lot of people. Please do not hesitate to reach out if we can answer any questions about it!

IRS forms

If you are not already, familiarize yourself with all of the different forms the Internal Revenue Service will require of you. Though you may be hiring a CPA to handle these for you, it is useful for business owners to go over them ahead of time to anticipate any information they will need to provide that they may not have thought of.

1099s

bookkeeping checklist

Yes, technically this is also an IRS form. But the nature of 1099s warrants its own entry on the year-end bookkeeping checklist. When dealing with vendors and independent contractors, it is imperative that you get them to complete W9s so that you can send them 1099s at the end of the year. This applies to anyone you did more than $600 worth of business within the calendar year. However, you do not have to include any transactions paid for with a credit card in your 1099 forms, a little-known factoid that has saved some of our partner organizations much time and hassle. If you pay your vendors and independent contractors with your business’ credit card, go ahead and check this item off the year-end bookkeeping checklist already!

Get documentation of charitable assets

Business owners tend to be a pretty charitable group of people. If you are like many of the other organizations we know of who did something to give back to your community over the course of the year, be sure to get documentation of the gift so that you can get the appropriate tax deductions in return. You have already invested in a cause that you support — no need to invest more than you have to in the form of taxes!

Update payroll file

If it has been a while since you have updated the documents you have on file for payroll, take the time to go through this process before the end of the year. In addition to ensuring that the documents you keep on file are in line with state and federal laws, this is a great chance to offer employees the chance to update their direct deposit and tax withholding preferences. By bringing it up, the hope it that you can handle multiple requests at once (more efficiently) rather than waiting for employees to ask you about it later in the year at different times.

Once you have completed the steps outline on this year-end bookkeeping checklist, you will be prepared for tax season (or, at least as prepared as anyone can be). It is also a helpful exercise to get you thinking critically about your business processes and what you might want to change in the coming year to improve. Whether you have questions about bookkeeping, could use some help with accounting and taxes or you just want someone to talk to about how you can streamline your bookkeeping and accounting in the future, be sure to give us a call. For over 30 years, we have been in the business of making payroll, accounting and HR as painless as possible for business owners just like you!


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