It’s that time of year again — the time for holiday cheer or, if you’re a small business owner, the time for end-of-year bookkeeping. But just because you run a small business doesn’t mean you need to work through the holidays. Yes, you can do your own end-of-year accounts and still enjoy a stress-free holiday. Start today with this simple, hassle-free year-end accounting checklist.
Make a List and Check It Twice
Thorough record-keeping can be a lifesaver, especially during the busy holiday season. To get your end-of-year accounting tasks in order, make sure you have your records well organized and accessible.
Depending on the type of small business you run, you will have a long list of items to double-check. This should include inventory records, business receipts and your income, cash flow and balance statements. All of these lists should be well organized, up to date and accessible.
If you notice your records are disorganized, then this is the time to make sure you have sound, clear and up-to-date bookkeeping systems in place. The good news is this won’t cost you too much right away. Try to find cloud accounting software that also offers training, webinars and free trials to help you test products and learn how to get the most out of them. And remember that Incfile offers accounting and bookkeeping services designed for small businesses like yours.
Collect Your Past Due Invoices
If you’ve been putting off those awkward late-payment notices, now is the time to be proactive and catch up on your bookkeeping. At the end of the year, many businesses, including your overdue vendors, will be reconciling their own accounts and may be finally able to pay your past due invoices. Take advantage of the generous holiday spirit to remind your past-due accounts that payment is needed.
Remember that it’s now or possibly never. An invoice one month late has a 94 percent chance of getting paid, while an invoice six months late has a 58 percent chance of getting paid. But an invoice one year late only has a 27 percent chance of being paid.
If you notice you have a large amount of past due invoices, you might want to look into a different approach in the new year. Providing an incentive for clients who pay quickly or making online payments available could help get you paid promptly in 2022.
Reconcile Your Accounts
If you haven’t been reconciling your accounts all year long, you’ll want to set aside some time to comb through your bank and business records before January 1. Find some quiet time to compare your bank statement with your company’s accounting records and balance your accounts. Everything should match. If you find a mistake now, it’s much better than finding it after it has snowballed, and that’s not the festive kind of snowball.
If an accounting error is ignored, it may only grow into something unmanageable later on. In that case, you might need to hire an accountant to fix it, which can become costly. Online accounting software designed for small businesses often have reconciliation templates to help make this process easier.
Start Thinking about Tax Season Now
Tax season may be the last thing you want to think about as you trim your tree and plan your New Year’s Eve celebration, but the truth is that it should be a main focus of your end-of-year accounting procedures. By reconciling your accounts now and double-checking your books and lists, you’ll avoid some of the most costly tax errors later on.
How are you keeping your receipts? If you have an organized system that has become disorganized, use this end-of-year time period to file those receipts. This is also the time of year when most small businesses take a look at all of the people they paid and send out tax forms like 1099s and W-9s.
Get a Little Help from Your Friends
More than half of small business owners surveyed by Bank of America rely on family to serve important business roles, like advisors, employees, investors and partners.
Source: Bank of America report
Whether your family and friends actually work for you or whether they are just part of your informal support network and team of volunteers, this is a time to lean on each other and show some gratitude.
The holidays are a great time to gather together, say thank you and follow up with your support network. Use this time to ask your friends to share your business with their networks, let them know what your business has been up to, invite them for a gathering or even ask a favor.
Need a loan? Holidays are a good time to share a business-focused startup fund, consider a small family loan or just ask an organized friend over for some Christmas cookies and a little help with your books. Small businesses rely on their communities to thrive and succeed, so remember you’re not in this alone.
An Incfile customer survey showed that after the last year, more small businesses are taking their business accounting more seriously, but many still rely on family and friends for support. It’s ok to ask for help; you may just be surprised what the holiday spirit moves some of your friends and families to do for you.
Know Your End-of-Year Bookkeeping Tips and Tools
The hustle and bustle of the holiday season and the pressure of finishing another year shouldn’t mean that just because you’re a small business owner, you are going to be busy and stressed. To make things even easier, Incfile offers complete accounting and bookkeeping services designed exclusively for business owners like you.
If you feel overwhelmed by the end-of-year bookkeeping tasks, you don’t have to go out and hire an accountant. Our full-service accounting and bookkeeping tools can make running your business a true breeze now and into the new year.
Nicole Bowman is a freelance writer who thinks turning research into stories is the best gig ever. She started writing billboards back in 2002, worked in book publishing in New York for many years and now she creates all sorts of engaging content for the web. Nicole lives in Rehoboth Beach, DE, with her husband, two sons and their poodle, Tootsie. She loves the great outdoors, bookstores and tennis.