Preparing for Year End as a BC Business Owner

‍

As the year comes to a close, it's important for small business owners to take stock of their finances and ensure their accounting is up to date. Whether you handle your own accounting or outsource it to a professional, there are a few key tasks you should tackle before the year is over.

In this blog, we'll walk you through the most important year-end accounting tasks and provide tips on how to make the process as smooth and stress-free as possible.

Let's dive in!

Year-end is an important time for businesses, as it is when they close the books for the year and prepare for the next one. To ensure that your accounting is in order, here is a checklist of tasks that you should consider completing at year-end:

‍

Year end checklist for business owners and entrepreneurs:

‍

Here are a few things you can do to make your year end accounting and tax preparation go smoothly.

1. Review and reconcile your accounts. This involves comparing your financial records with your bank statements and other supporting documents, and making any necessary adjustments. Reviewing and reconciling your accounts is a critical step in maintaining accurate and complete financial records. By taking the time to review and reconcile your accounts on a regular basis, you can ensure that your financial records are accurate and reliable, which can help your business succeed and grow by allowing for improved accuracy, enhanced control, better compliance, and improved decision making.
   ‍‍
2. Verify the accuracy of your balances. This includes checking the accuracy of your account balances, such as your cash, accounts receivable, and inventory, and making any necessary adjustments. Verifying the accuracy of your account balances at year end is crucial for legal compliance, decision-making, security, and reputation. By taking the time to verify the accuracy of your account balances, you can ensure that your financial records are accurate and complete, which can help your business succeed and grow.
   ‍‍
3. Adjust your accounts for accruals and deferrals. This involves adjusting your accounts to recognize revenue and expenses that have been earned or incurred but not yet recorded in your financial statements. Accruals and deferrals are accounting concepts that refer to the recognition of revenues and expenses that have been earned or incurred, but have not yet been recorded in the financial statements. Here are some examples of accruals and deferrals:
   Accrual example : A small business provides consulting services to a client in December 2021, but the client does not pay until January 2022. The revenue from the consulting services is accrued in December 2021, even though it is not received until the following month.
   Deferral example: A small business receives payment for consulting services that will be provided in January 2022. The revenue is deferred until January 2022, when the services are provided.
   ‍‍
4. Review and update your chart of accounts. This involves reviewing your chart of accounts and making any necessary changes, such as adding new accounts or merging existing ones. Updating your chart of accounts is important because it helps ensure that your financial records are accurate and complete. The chart of accounts is a list of all the accounts used by a business to record its financial transactions. It includes categories for assets, liabilities, equity, revenues, and expenses. A chart of accounts is different for every business, so make sure yours best fits your accounting needs. And remember, don't make them too specific.
   ‍‍
5. Prepare and analyze your financial statements. This includes preparing your income statement, balance sheet, and statement of cash flows, and analyzing your financial performance for the year. Updating financial policies and processes is essential for maintaining effective and efficient financial management in your business. By taking the time to review and update your financial policies and processes on a regular basis, you can ensure that your business's financial management is effective, efficient, and compliant with relevant laws and regulations.
   ‍
6. Review and update your financial policies and procedures. This involves reviewing your financial policies and procedures, such as those related to internal control and financial reporting, and making any necessary updates. Having not just financial processes, but all internal processes written down can save time and help increase workplace efficiency.
   ‍
7. Prepare for tax filing. This involves gathering the necessary documents and information, and working with your bookkeeper, accountant or tax advisor to prepare and file your tax returns.

By completing these tasks at year-end, you can ensure that your accounting is accurate and up-to-date, and that you are prepared for the next year.