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We all feel a sense of apprehension and anxiety when year-end comes around for our business. In reality, it is easy to prepare your company for a smooth year-end. Just follow the step-by-step approach below, or you can also request your bookkeeping company to perform these functions to ensure a smooth year-end and provide a clear view for your new business year. At the end of the day, you need to do an evaluation on where you are spending your valuable time, i.e. Growing your business sales and profits, or recording transactions?Â
Reconciliation is a key function of your bookkeeping. It allows you to check for fraudulent activities on your account and it prevents financial statement errors.Â
Your P&L report or income statement should be prepared at minimum quarterly, recommended monthly, to give you valuable insight into your business profitability. Comparing your P&L report against previous timeframes, or even better – a “Budgetâ€, will give you the direction your business is heading in.Â
Make sure your salaries, wages, payroll taxes, pay-as-you-go and pensions have been calculated accurately and payments to staff, employees and tax & pension agencies are up to date.Â
It’s important for every business to anticipate their income and expenses for the next year and create a budget. The easiest way to do this is to look at the previous year’s actual income and expenses, and make growth and inflation adjustments for the budget.Â
Being profitable and having a positive cash flow are two separate considerations and risks. I is crucial for businesses to not only assess their profit and loss, but also create a cash flow report. If a business is not able to cover their short-term liabilities (monthly bills, or fixed commitments like rent), this will create a myriad of business challenges. The inability to pay staff, rent/loans, tax & pension agencies, and vendors on time can lead to a loss of human capital, poor supplier relationships, tax penalties, legal suits, and possible closure. Â
Your balance sheet is basically a summary of all your “assets+equity†(what you own), with your liabilities/debt (what you owe others). The debt vs equity ratio of your company is an important indicator of the financial position of your business. Most online accounting software will have this calculation available to you. This will enable you to review your position vs previous years and make ensure you are on a positive trajectory.Â
Remember, reducing your year-end bookkeeping anxiety is an ongoing and committed process, so be patient and kind to yourself. Implement these strategies gradually and find what works best for you to create a calmer and more productive year-end bookkeeping experience. Conducting a bookkeeping business health check with the assistance of a trusted bookkeeping company will give you the peace of mind and ensure that your business’s financial foundation is sound.Â
