I hope you survived the Christmas holiday and are looking forward to the new year. Last week we talked about the dreaded W-2 and 1099 preparation. This week I thought I would share some year-end tasks business owners should do on their Financial Statements.
• Reconcile all bank accounts and review outstanding checks and deposits for those that have been outstanding for over 6 months to determine whether they need to be re-issued or voided, while staying in compliance with state unclaimed property laws.
• Review accounts receivable aging report for reasonableness, adjust allowance for doubtful accounts, and verify aging report balance ties to accounts receivable account on the balance sheet.
• Perform a year-end inventory count and make any necessary adjustments.
• Review prepaid expenses for reasonableness.
• Review unbilled services for reasonableness.
• Adjust depreciation to actual.
• Review accounts payable aging report for reasonableness and verify aging report balance ties to accounts payable account on the balance sheet.
• Accrue payroll, if applicable.
• Tie out loan balances to bank statements and verify accuracy of other liability balances.
• Verify balance in retained earnings has not changed from the prior year.
• Review all income and expense accounts for reasonableness.
• Verify net income on balance sheet ties to year-to-date net income on income statement.
• Update information on employees and vendors (i.e., address, SSN, EIN, etc.).
If you do these steps your tax accountant will LOVE you!