The calendar year is about to end, and, for most growing companies, that means the closure of the fiscal year as well. It means that there are several bookkeeping services tasks that need to get done before another year flips in. Some of these are obvious, but some key points are less known especially to the first time entrepreneur.
It is necessary to consider reconciling your accounts. Among all the annual bookkeeping and accounting services tasks, reconciliation is considered the most important. An entrepreneur must reconcile with the “Aged Accounts Payable” balance to “Accounts Payable” balance and your “Aged Accounts Receivable” balance to “Accounts Receivable” balance on the balance sheet.
The bank balance needs to be reconciled with the accounting books, records and financial data too. These ensure that the necessary financial assets and transactions have been tracked and recorded efficiently. Reconciliations are usually done before the end of the year and then rolled forward to include year-end.
The next thing to consider is to organize contractors. Lots of small business started out as one or two-person enterprises that collaborate with contractors. Business owners who hire independent contractors and provide them more than $600 per year are required by the law to forward them a form 1099 by the 31st of January of the next following year. It is necessary to gather required information from the contractors that include legal name, address and social security details as well. Always keep of the amount paid for the services the contractors have provided.
Make sure to collect outstanding bills and financial transaction by using reliable accounting software. This advance tool allows entrepreneurs to keep track of the outstanding invoices that carry over into a new fiscal year with less hassle. It is also important to determine the clients or customers that have past due charges and make sure to turn up the heat and do the necessary collections. If the attempts to collect would be fruitless, first, stop the services for this client. Second, write off the bad debt and acquire a tax deduction. Entrepreneurs may need to establish reserves as well. If products with warranty are being sold, make sure to have a “Reserve” account to cover future issues related to claims based on historical rates of charges. This assessment is ideally done during year-end.