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Steps To Take At Year-end

Posted on December 30, 2009 by Leasa Magnuson in Business Tax

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!

business owners, financial statements, tax, yearend

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Leasa Magnuson was there when we needed her.

An unexpected audit on our returns was triggered by an unfortunate investment loss. All of the horror stories we had heard about came to the top of our minds and the adrenaline started pumping. We had never been through an IRS audit and didn’t know what to expect. We gathered all of the information requested. Leasa reviewed what we had, suggested a few more items and then we dropped off the requested supporting documents to the IRS several days prior to the audit. Promptly at 9:00 a.m. on audit day Leasa was there to support me and answer the grueling questions I was sure would come from the investigator.

Before we had a chance to take the hot seats in the investigator’s office, we were told that they had reviewed our documentation and we were given a "no change" verdict – which means everything checked out. We were free to leave.

I am confident Leasa’s council, review, and organization of our documentation and giving the IRS advanced time to review the information led to the positive outcome.

We are very lucky to have her on our team and will continue to use Leasa in the future.

Anita & Mike Kelly

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4025 Automation Way #D1 (Map), Fort Collins, CO 80525 - Phone: 970-226-4686