Check it Twice: Year-End Accounting Checklist

As the year comes to an end, it is time to look back on your small business and evaluate what went right and what went wrong. You can celebrate successes and pivots that were made to accommodate COVID-19. You can relax and recover after a holiday rush.

Reflection at the end of the year is essential, and getting your finances in order is also vital. Your year-end accounting checklist is a list of small business accounting tasks to get a pulse on your business. You can use the accounting checklist to nail down exactly how successful your company was this year compared to other years.

As you review your accounting checklist for 2020, reflect on the trials that you overcame in your business. If your business was hurt significantly from the pandemic, make realistic accounting goals for 2021 that will be achievable. Use this comprehensive end-of-year accounting checklist to get your business in order before the New Year.

1. Cash Flow Analysis

There are a number of reports to run at the end of a full year of business. One of them is the cash flow report. When you take a comprehensive view of the cash inflow and cash outflow over the course of a year, you will see patterns. Do you remember specifically when you were strapped for cash in your small business? What went wrong? What can you do better next year?

You can also compare your cash flow to reports from previous years’ accounting checklist. This year will look different because of COVID-19. It was unlike any other year, some small businesses benefiting as online sales went up during the pandemic. How can you continue to bring in cash while being strict about the amount of money that goes out?

Oftentimes, if cash flow has increased, a small business owner may be inclined to spend more freely. If you saw a large amount of cash flow this year that resulted in overall profit for your business, contact a small business accountant. You can review the numbers and make a decision on whether it is smart to make a big purchase to invest in your business with the unexpected year’s profits.

2. Account Receivables Reconciliation

Next up on the accounting checklist is going through your list of accounts receivables for the year and being sure that all is paid and reconciled. You can run a report and find out your turnaround time when it comes to billing clients and receiving their payments.

When you have a clear view of patterns that were set for the year, you will be able to improve accounts receivable for the upcoming year. Did you get paid on time? Were your cash flow problems due to receiving late payments from customers? This is the case with many business owners, and when you don’t have a strict accounts receivable system, it can lead to big problems with needed cash flow.

Use the 2020 accounting checklist to collect all of your outstanding bills and implement a new policy where your accounts receivable will have a shorter turnaround. This way, you will have the money coming in that you planned for when a service has been performed, or goods have been purchased. The smaller the turnaround, the better for your business and accounting practices.

3. Vendor Status Updates

The end of the year is a good time to go through your vendor list. Evaluate which vendor relationships are invaluable. You can send gifts of thanks for their accuracy and timely deliverables. You can compare reports and prices and determine if a particular vendor made good on their promises of savings.

It is also an excellent time to remove any vendors from the list who are obsolete or cannot benefit your business. Keeping your list of vendors short and high-quality will save you time later when you need to consult the list. When you update the list each year, you won’t be caught forgetting that one vendor doesn’t carry what you need or the other vendor can’t compete as well as the others for a particular inventory item.

4. Payroll and Benefits Verification

It’s essential to make sure your employee paychecks are accurate for the end of the year accounting checklist. Your employees will be filing taxes, and your business will be responsible for any mistakes on their paychecks. Backpay of FICA or employee raises can be a large bill that wasn’t planned, so it’s essential to make sure you have that correct the first time around.

The end of the year can also be a time to celebrate your employees. If they worked extra hard through the holiday rush, then reward them with paid time off. Show that you value your employees by giving them benefits specific to your small business.

5. Staff Needs for Upcoming Year

Take a look at your business’s busy patterns vs. slow times and make a plan for hiring staff for the upcoming year. What could you have done better this year to streamline your employees’ workflow? When you look at the year overall, you will get a more accurate picture of how you can improve.

6. Tax Preparation

Collect all of the documents needed to file for taxes. Accounting software can help you identify all the financial reports and documents that you will need. And even better, a small business accountant can help you get everything you need to be done when it comes to taxes on your year-end accounting checklist.

Do you have a tax strategy for your small business? When you consult with an accountant, you will find there are ways to save money with taxes. There is a variety of strategies that could apply to your company, and an accountant can help you identify which one will save you the most money.

7. Accounting Backups

The end of the year is a great time to be sure you have all the backups in your accounting system that you need. If you use a cloud backup service, that is helpful as they backup in real-time. But it is also essential to download specific reports each year to keep on an external hard drive. When you double your backups, you will never lose important files related to your small business.

8. Business Organization

Has your store been turned upside down through the holiday rush? Take time to organize your store at the end of the year. Give a deep clean and organize shelves, rotating any inventory that will no longer be needed in the new year. If your business doesn’t have a brick and mortar store, you can organize your files and your website. Be sure that your website has a customer-friendly flow.

9. Inventory Check

Run an inventory report and make sure it matches up with your end-of-year sales. If you neglect counting inventory, especially after an influx of business, you will leave your small business vulnerable to fraud. Performing checks and balances with your inventory may feel tedious, but it is necessary for keeping your business secure.

10. Website Overhaul

Take this time to go through your website, making sure all the links work. Look at it from the perspective of a potential customer – what welcomes you into the website? What may be difficult to navigate? Your accounting checklist can include updating your website to be ready for new sales in the new year.

11. Business Goals

Take a look at your goals from previous years, and see if you met any new goals this year. When your business is goal-driven, you will always have a target you are trying to hit. And your small business will have a progression toward that goal, always working toward improvement. Set new goals for the upcoming year that are even better than the year before.

Focus on the Future

Now that you have gone through everything on your accounting checklist, it is time to wrap up the year 2020 and focus on the year to come! You have a clear view of how your business improved and know what you need to adjust in order to be even better in 2021. Knowledge is power, and it’s up to you what to do with that knowledge.

Looking ahead for your small business, focus on the positive. Which employees are invested in your business with you? Celebrate them. What challenges are up ahead that you are ready to tackle? Make a plan and overcome slow times in your industry. The possibilities for your small business growth in the future are endless. Your business succeeded through a pandemic that no one saw coming. If your business survived that, it could survive anything and maybe even thrive in the year to come!

End the year 2020 with everything in order and ready for greater success in 2021. Our team at Easier Accounting can help you achieve that. Whether you need help with taxes or setting realistic small business goals for the upcoming year, it is best to contact an accountant who can help. Call us to set an appointment at (888) 620-0770.

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