Business Bookkeeping Year-End Checklist: Get Your Finances in Order

Are you getting ready to wrap up your business bookkeeping for the year? If not, now is the time! You need to do a few things to get your finances in order. In this blog post, we will discuss the steps you need to take to ensure your books are in good shape. By following this checklist, you can relax and enjoy the holidays knowing that your business finances are taken care of!

Balance Sheet Reconciliation

It’s a process in which you compare the amounts reported on your Balance Sheet to outside sources such as bank statements, loan documents, and customer accounts. This ensures that all assets and liabilities are accurately accounted for, and any discrepancies are identified and corrected.

Reconcile Cash Accounts

You should reconcile your bank accounts, including any credit cards and petty cash. This will ensure that everything is up-to-date and accurate. When you reconcile your accounts, you match the balances reported on your books with bank and credit card statements. This ensures that all your expenses, income, assets, and liabilities are accurately recorded and provide an accurate overview of your financial performance.

Inventory

Perform a physical inventory count and reconcile it with the balances in your bookkeeping system. Ensure you correctly identified and accounted for all the products in your inventory.

Payroll tax liabilities

Comparing your payroll liabilities to actual year-end balances is one of the crucial tasks to complete as you wrap up your bookkeeping for the year. This will ensure that all of your employee wages and withholdings are accounted for and that there are no discrepancies.

Ensure that your payroll liabilities align with your actual year-end balances.

Review Accounts Receivable and Payable Aging Reports

Review your accounts receivable to ensure that all due invoices have been paid. Also, review the accounts payable to ensure that all expenses are up-to-date. This step can help you identify any unpaid bills or late payments so that you can stay on top of them before the new year.

You might want to write off any uncollectible balances on the Accounts Receivable aging report.

Business Loans

It’s important to know exactly how much debt you have and what type of loans you have taken out for your business. Reviewing this information can help you plan for the future and ensure that all payments are up-to-date.

Fixed Assets

Perform a physical inventory of all fixed assets and reconcile it with your bookkeeping records. Ensure all assets are accounted for and correctly entered in your books.

Profit & Loss Statement

The Profit & Loss Statement is one of the most important financial documents of your year-end bookkeeping. It determines your business income and expenses and your annual net profit or loss. A professional accountant should prepare this statement so that it is accurate and provides the true picture of your company’s financial performance.

Revenue

As you wrap up your bookkeeping for the year, one crucial task is reconciling your revenue to actual year-end balances to the point-of-sale system (POS) and billings. This will ensure that all of your income is accounted for and that there are no discrepancies.

Review Annual Expenses

Take some time to review your annual expenses and look for ways to cut costs next year. This could mean reviewing vendor contracts, looking for cheaper alternatives, or canceling unused services or subscriptions. 

Payroll Expenses

You must compare the totals to confirm that your payroll expenses reconcile with the year-end payroll journals and tax returns. The totals should match; otherwise, a discrepancy may need to be corrected.

Owner’s expenses

Enter in the books the expenses the owner paid personally, including mileage, cell phone, home, etc. Review the expenses from the previous year and make any adjustments as necessary.

Taxes

The year-end is also a good time to review your company’s tax records. Make sure that all necessary records are up-to-date, accurate, and complete. This is a crucial step to staying compliant with the law and keeping your business on the right track.

Conclusion

It’s essential to stay on top of your bookkeeping records throughout the entire year. These are steps you need to take when wrapping up your bookkeeping for the year. Following this year-end business bookkeeping checklist ensures that everything is up-to-date, accurate, and ready for the tax season.

Contact us if you have any questions or need help getting started with your business bookkeeping. We can help you identify any areas of concern and make sure that all of your financial records are accurate and organized. 

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Sales Tax in California: What You Need to Know

If you’re a business owner in California, it’s important to understand the sales tax laws in your state. In this blog post, we will discuss some of the basics of sales tax in California. We’ll cover topics such as who is required to collect sales tax, what products are taxable, and how to file and pay sales tax. If you’re a business owner in California, this blog post is for you!

Who is required to collect sales tax

In California, sales tax is collected by the business that sells products. This means that businesses are responsible for collecting sales tax from their customers and filing and paying sales tax to the state government – the California Department of Tax and Fee Administration. The sales tax rate in California is determined by each county and/or city, so businesses must be aware of the applicable rates for their particular area.

What products are taxable

In California, most tangible items sold to consumers are subject to the state’s sales tax. This includes items such as clothing, furniture, electronics, and more. It’s important to note that certain items may be exempt from sales tax based on their use or purpose (e.g., medical supplies).

How to file and pay sales tax

Businesses must register with the state of California to collect and submit sales taxes. The Department of Tax and Fee Administration provides a variety of online tools that businesses can use to register, submit returns, and make payments. Businesses must file their sales tax returns on a monthly, quarterly, or annual basis depending on the size of their gross sales.

To ensure compliance with California’s sales tax laws, businesses must keep accurate records of all transactions and maintain up-to-date information about applicable rates in their area.

By understanding the basics of sales tax in California, businesses can stay compliant and avoid costly penalties. As a business owner, it’s important to be aware of these laws and ensure that you are filing and paying your sales taxes accurately and on time.

How to file and pay sales tax in California

Once a business has registered for sales tax, it must file and pay its sales taxes. This process involves filling out the appropriate forms, submitting them to the state government, and making payments on time.

The Department of Tax and Fee Administration provides online services that businesses can use to register, file returns, make payments, review payment history, and more.

It is important for businesses to keep accurate accounting records of all transactions and maintain up-to-date information about applicable rates in their area. This will help them ensure compliance with California’s sales tax laws and avoid costly penalties.

By understanding the basics of sales tax in California, businesses can stay compliant and keep their operations running smoothly. Being aware of these laws is essential for any business owner in California. With the right information and resources, filing and paying sales taxes should be a simple process.

Common mistakes made when filing and paying sales tax

One of the most common mistakes businesses make when filing and paying sales tax is not keeping accurate bookkeeping records. Without accurate data, it can be difficult to determine the correct amount of sales tax owed or calculate any credits for eligible purchases. Additionally, failing to file returns on time or making payments late can lead to costly penalties.

By taking the time to understand the basics of sales tax in California, businesses can stay compliant and avoid making costly mistakes. Keeping accurate records of all transactions, maintaining up-to-date information about local rates, and filing returns on time are key steps for staying in compliance with sales taxes in the state. With the right resources and knowledge, businesses will be able to file their sales tax returns accurately, on time, and without penalty. With a bit of preparation, sales tax filing can be a straightforward process.

If you need help keeping your accounting records correct, reach out to us. We can help you stay compliant with California’s sales tax laws and keep your business running smoothly.

This article is for informational purposes only and does not constitute professional advice or services.

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Make the Right Choice for Your Business: Outsourcing Accounting vs. Hiring an Internal Team

There are two main ways to handle your company’s accounting needs: outsourcing bookkeeping or hiring an internal team. Both have their own set of pros and cons, and it can be hard to decide which is the best option for your business. In this blog post, we will discuss the benefits and drawbacks of both options so you can make the right choice for your business.

1. Outsourced accounting

When you outsource your accounting needs, you are relying on an outside firm to handle all aspects of your financials. Pros: Outsourcing can save you time and money by eliminating the need to hire, train, and manage an internal team; it also allows access to professionals with specialized accounting or bookkeeping knowledge; outsourced options also provide up-to-date technology, such as cloud-based accounting software, for example, QuickBooks. Cons: You may not have complete control over the work that is done, and there may be a language barrier if you are working with an international freelancer.

2. Hiring an internal team

Hiring an internal team of accountants, bookkeepers, and other financial professionals gives you control over your accounting department. Pros: You can tailor the work done to meet the specific needs of your business; you have more control over processes and procedures; you will be able to review any mistakes made in-house instead of relying on an outside firm. Cons: You may have to invest more money to set up an internal department; you will also need to spend time training and managing the team, which can add more work to your plate.

Ultimately, choosing between outsourcing accounting or hiring an internal team comes down to what works best for your business. Consider your budget, workload, and needs before making a decision. Ultimately, you want to make sure that you can get the financial services and support that your business needs to succeed.

3. Which option is right for your business?

No one option is the perfect solution for everyone. It’s important to weigh the pros and cons of each option and make a decision that works best for your business needs. If you’re looking for cost savings, outsourcing may be the better choice. On the other hand, if you need more control over processes and procedures or access to specialized knowledge, hiring an internal team may be the way to go. Consider the size of your business, budget, and workload before making a decision.

At the end of the day, the important thing is to make sure that you have access to reliable and accurate financials to ensure that your business runs smoothly and efficiently. Take time to evaluate your needs and make an informed decision that will benefit your business in the long run. 

If you are looking for a reliable outsourced accounting firm, please reach out to us. We offer a wide range of accounting and bookkeeping services that can meet the needs of your business. We have years of experience providing quality services to small businesses and start-ups, and we would be happy to discuss our solutions with you!

This article is for informational purposes only and does not constitute professional advice or services.

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The basics of reading financial statements for small business owners

Are you a small business owner who is looking to get a better understanding of your company’s financial statements? If so, you have come to the right place! In this blog post, we will discuss the three most important financial statements for small businesses: the balance sheet, the income statement, and the cash flow statement. We will also provide tips on how to read these statements and what they mean for your business.

Balance sheet statement

The Balance Sheet is the first financial statement you should analyze. This statement shows your business’s assets, liabilities, and owner’s equity. Assets are the items that your business owns, such as cash, inventory, equipment, and buildings. Liabilities are the debts or obligations of your business, such as accounts payable, loans, and salaries owed to employees. Owner’s equity is the difference between your business’s assets and liabilities.

Income statement

The Income Statement shows your company’s revenues, expenses, and net income over a specific period of time. Revenues are all sources of money coming into your business, such as sales or services rendered. Expenses are the money that goes out of your business, such as rent, taxes, and payroll. Net income is the amount of money that is left over after all expenses have been paid.

Cash flow statement

The Cash Flow Statement shows how much cash is flowing in and out of your business over a specific period of time. Inflows are sources of money coming into your business, such as customer payments, investments, and loans. Outflows are sources of money going out of your business, such as payroll, taxes, and expenses.

How to read financial statements

Now that you understand the three most important financial statements for small businesses let’s discuss how to read them. First and foremost, it is important to remember that all financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP). This means that the information included in each statement must be accurate and reliable.

When reading a balance sheet, you should look at the total assets, liabilities, and equity to get an overall picture of your business’s financial health. 

As you review the income statement, you should focus on the revenue and expense categories to get a better understanding of where your business’s money is coming from and where it is going. 

The cash flow statement will help you to analyze both inflows and outflows to determine how much cash your business has available for operations.

By taking the time to read and understand these financial statements, small business owners can gain valuable insights into their company’s financial health. This knowledge can then be used to make informed decisions about the future of their business. 

The last step in learning how to read financials for a small business owner is to take action. Knowing what all of these documents mean and understanding their implications is one thing, but it’s important to use this knowledge to make informed decisions about your business. Reviewing these financial statements regularly will give you valuable insights into the financial health of your company so that you can decide when and where to invest for growth or save for potential downturns.

If you need assistance, reach out to us, and we will provide guidance. We offer comprehensive accounting and bookkeeping services and can help you understand your financial statements.

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