Year-end closing is the process of reviewing and reconciling accounts, adjusting entries (where necessary) and preparing financial statements for the fiscal year. We’ll also show you how using financial close software speeds up the process so that you can complete the annual close in record time with accurate financial statements. For example, ideally you should review your accounts payable and receivable aging reports at least a month before year-end to identify any potential issues that need to be addressed. Setting early deadlines for submitting outstanding documents (like employee expenses or vendor invoices) ensures that end of year bookkeeping you’re not scrambling at the last minute. By closing the books in your accounting system, you ensure the integrity of the year-end data and prevent any accidental changes or entries after the close. This is also a critical step for initiating the audit process and preparing for tax filings.
Many accounting and bookkeeping tools, such as Quickbooks and Gusto, already include these reports, so you don’t need to build them from scratch. In her CPA firm, Delker finds that technology is key to tackling bookkeeping. VJM Global offers comprehensive support to simplify your year-end closing. We handle everything from account reconciliations to preparing tax-ready reports, helping you close your books efficiently and accurately.
Once adjustments are complete, close out temporary accounts, such as revenues and expenses, by transferring their balances to retained earnings. Gathering all necessary data involves communication between your finance team, payroll providers, accountants, and sometimes external vendors. By involving both finance, sales and other business teams in the receivables process, Upflow fosters better communication and collaboration.
Ensure that all eligible business expenses are recorded and categorized correctly. This will help you identify any discrepancies and manage your inventory more effectively. Employee benefits (like health insurance, retirement plans, etc.) need a review too.
Billing and Accounts Receivable
Reconciliation makes sure the numbers in your books match the numbers according to your bank or credit card statements. It’s double-checking your work to catch any mistakes or oddities, like unauthorized charges or deposits that haven’t gone through yet. Having a financial close schedule establishes a roadmap for completing the necessary activities within the agreed timeframe.
Employee Expenses
This step is crucial for finalizing the year-end reports and preparing for the next fiscal year. Reconciliations should be done regularly to identify and resolve discrepancies early, and year-end reconciliation ensures that no material errors are left unaddressed. This practice also improves the reliability of the final financial statements and supports audit processes. To ensure accuracy, compare sales records with bank receipts and payment histories, cross-checking for discrepancies. This review helps identify unpaid or overdue accounts, meaning you can action follow-ups with customers to ensure timely collection. The flux analysis serves as a final check to ensure the completeness and accuracy of your financial records.
Q1. Why is a checklist important?
- This guide is also related to our articles on common accounting errors and how to avoid them, how to read a balance sheet, and how to hire a virtual bookkeeper.
- Set financial goals, update budgets, and implement strategies for improving cash flow, reducing costs, or expanding operations.
- Having a financial close schedule establishes a roadmap for completing the necessary activities within the agreed timeframe.
- This is particularly relevant in industries with long billing cycles, like consulting or construction, where work may be completed in one fiscal year but invoicing can lag.
- For example, Big Bikes LLC is a company that sells imported bikes to retail customers in 4 different states of the U.S. through a chain of 20 stores located in highly-populated areas.
This will ensure that you settle all collections and debts without any penalty. This process is called “reconciling” — matching up the bottom line in your accounting with the bottom line in your accounts. Delker has overseen year-end accounting for Fortune 500 companies and private sector small businesses. Common errors include missing transactions, inaccurate reconciliations, failure to adjust accruals, and not verifying tax compliance.
We’ll work closely with your CPA to handle your year-end tax prep, ensuring compliance and maximizing your deductions. Tanger Outlets, for example, used Vena to speed up its financial close process. Before using the software, Director of Financial Reporting, Michelle Canada and her team relied on Excel spreadsheets to manually input their general ledger data. Proactive planning during year-end close helps optimize your company’s tax position, reduce tax risks and ensure compliance with tax laws and regulations.
Documenting the actual execution of the year-end close process, on the other hand, involves maintaining thorough records of the process. To complete this step, gather all necessary tax documents, such as W-2s, 1099s and other relevant tax forms. An income statement (also known as a profit and loss statement) provides a summary of your company’s revenues, expenses and net income (or net loss) during the fiscal year. Accounts payable are the amounts your company owes suppliers and other third parties, while accounts receivable are the money your company expects to receive from customers. Compare each transaction in your bank statements with the corresponding entry in your general ledger, and then check for discrepancies between them. They continuously work on tasks related to the close process throughout the year rather than leaving everything to the last minute.
- Tax planning is the process of analyzing and planning the financial position of your business to minimize tax liability while complying with the laws.
- Fiscal year-end is a consecutive twelve-month period that a company chooses for financial reporting purposes.
- Here’s a guide to streamline your year-end accounting process—and how a professional accounting firm like Team One Accounting can support you every step of the way.
- Our team specializes in QuickBooks Online and will handle year-end software updates to ensure your financials are ready for the new year.
- Over the course of the year, your books accumulate a large number of entries.
- With account reconciliation software, you can match entries automatically, flagging only the accounts your accounting team needs to review and reconcile.
The only way businesses can accelerate their month-end close process while ensuring accuracy, is to have a robust, automated financial close software in place. With real-time dashboards and integrated task management, finance teams can collaborate efficiently and meet deadlines with ease. Financial close management software accelerates the closing process, enhances efficiency, and supports accurate reporting for smarter strategic decisions.
Based in Monroe, GA, I get to enjoy working remotely and growing my virtual bookkeeping business. By working with a virtual CPA firm for years as an office manager and bookkeeper, I can say that I have found what I love to do – BOOKKEEPING! I am a certified QuickBooks Online ProAdvisor with bookkeeping experience in a extensive variety of industries while specializing in e-commerce and service industries.
Reconciling bank statements helps ensure that your cash balances match what is recorded in your accounting system. This process can uncover errors such as unauthorized withdrawals, accounting mistakes, or timing differences (e.g., checks not yet cleared or deposits not yet recorded). As an experienced corporate accountant and financial controller, I’ve spent countless hours perfecting the year-end close process.
Additionally, you can automate data preparation on LiveCube to streamline your year-end process. Keeping a record of all accounting data for future reference is critical for all businesses. Hence, don’t forget to add ‘backing up of important information’ to your year-end checklist. Adopt a reliable backup system that will protect your important accounting information on your devices. Utilize cloud backup to store data, which will help you protect against cyber attacks or other such IT crises.