It’s that time of the year again… tax season is here!
We all know that having clean, accurate, and up-to-date books is crucial for any small business.
Nevertheless, the year-end cleanup process can be incredibly stressful and mind-numbingly dull – not to mention just plain time-consuming. It’s a process I have more experience with than most – I used to handle the bookkeeping for my family’s retail business, and as the founder of Retail Intel, I have reconciled more QuickBooks companies, for more months, than I’d like to remember.
To make things easier for myself, I came up with a sanity-saving checklist. I knew that if I got through the following 12 points, then I wouldn’t be missing anything vital. I hope it helps. you this tax season!
- Compare your total cash deposits to your POS reported totals.
If you haven’t been doing this month-by-month, save time now by comparing monthly totals.
- Get statements from your credit card processor, and make sure your total deposits and fees on their reports match your deposits and fee expenses in QuickBooks. Again, don’t focus on matching every single day exactly, because they often won’t line up. Instead, focus on monthly totals. The key is to make sure you’re capturing your fee expenses accurately.
- Next, turn to checks. Review your bank statements to see if any handwritten checks were cashed but not entered into QuickBooks.
- Finally, make sure all direct debits are entered into QuickBooks. Save time by loading your bank statements into Excel, grouping by the memo column (which should have the vendor name in it), and comparing the totals by each vendor to the Transactions by Vendor report in QuickBooks.
Small Business ‘Profit and Loss’ and Balance Sheet
- If you paid rent or any other expenses for January 2014, make sure the bill date or check date is in 2014. Make sure any bills dated 2013 are entered into QB with a bill date of 2013, to reflect when the expense occurred.
- Make sure you accrue any unpaid payroll expenses for the end of December.
- Book a year-end closing inventory amount. If you didn’t do an accurate hand-count of inventory on 12/31, make a best guess at what the dollar value of your closing inventory would have been.
- Make sure your December sales tax liability shows on your 12/31 balance sheet.
- Get a year-end statement from your bank for your commercial loan (if you have one). Make sure you’ve booked the principal/interest splits correctly, and that the principal balance of your loan in QuickBooks matches the closing balance on the bank’s statement.
- If you have a gift card, loyalty program, or something like Groupon or Living Social, make sure your outstanding liabilities are up to date.
- Check with your accountant for rules regarding fixed asset tracking. Make a list of all the equipment you purchased and leasehold improvements you made and consult with them on the optimal way to depreciate.
- Book any credit card expenses that occurred in 2013, but were not yet paid for as of 12/31.