Comprehensive Year-End Checklist for Small Business Bookkeeping

From officially closing your books to filing the taxes, a year-end checklist for bookkeeping ensures a smooth transition into the new financial year for any small-scale business. There are multiple chores during this period that needs to be taken care of. These may include something as basic as reconciling your accounts to something as complicated as reviewing your financial statements. On top of this, other important and unmissable chores like preparing your tax return, ensuring minimum wage compliance, and conducting performance reviews must also be carried out for successful year-end bookkeeping.

There is so much to do and such little time. Isn't it? Therefore, in this blog post, we have compiled a list of year-end bookkeeping tasks that will help you close the current financial year on a strong note and set your business up for success in the new year to come. Here's a comprehensive year-end bookkeeping checklist for small businesses so that every year is as merry as the previous one. Let's explore them below.

What Is Bookkeeping?

Bookkeeping is defined as the process of recording all the financial transactions made by a business. Accountants then use this financial information to prepare financial statements and tax returns at the end of the year. Financial statements give insights into a business's profitability, liquidity, and solvency. At the same time, tax returns are filed with the government to declare income and calculate taxes payable.

Therefore, year-end bookkeeping is critical for small businesses as it allows them to track their progress and performance over twelve months. Additionally, it also provides valuable insights that can be used to make informed decisions about the future direction of the business. Furthermore, year-end bookkeeping also makes filing taxes a breeze, as all the required information is readily available.

Why Is Year-end Bookkeeping Important For Small Businesses?

As mentioned earlier, year-end bookkeeping is important for small businesses as it allows them to track their progress and performance over a twelve-month period. Additionally, it also provides valuable insights that can be used to make informed decisions about the future direction of the business. Furthermore, year-end bookkeeping also makes filing taxes a breeze, as all the required information is readily available. However, that's not all. Year-end bookkeeping also has some other benefits, which are listed below.

• It Helps You Understand Your Financial Position

Year-end bookkeeping gives you a clear picture of your business's financial position. This is because it involves recording all the income and expenses incurred by your business over twelve months. Therefore, you can use this information to better understand your business's financial standing. Additionally, you can also use this information to make informed decisions about the future direction of your business.

• It Helps You Make Informed Decisions

As mentioned earlier, year-end bookkeeping gives you a clear picture of your business's financial position. This is because it involves recording all the income and expenses incurred by your business over twelve months. Therefore, you can use this information to better understand your business's financial standing. Additionally, you can also use this information to make informed decisions about the future direction of your business. For instance, if you want to expand your business, you can use the information gathered during bookkeeping to determine whether or not you have the financial resources to do so.

• It Helps You Save Money

Year-end bookkeeping can help you save money in two ways. Firstly, it allows you to identify and correct any errors in your financial records. This is important as mistakes in your financial records can lead to inaccuracies in your tax returns, resulting in IRS penalties. Secondly, year-end bookkeeping can also help you take advantage of deductions and credits that you may be eligible for. For instance, if you're a sole proprietor, you can deduct the cost of health insurance premiums paid for yourself and your family.

• It Helps You Prepare For The Future

Year-end bookkeeping provides you with information that can be used to prepare for the future. For instance, if you want to expand your business, you can use the information gathered during bookkeeping to determine whether or not you have the financial resources to do so. Additionally, if you're considering selling your business, year-end bookkeeping can help determine its value. Lastly, if you're looking to retire, year-end bookkeeping can help you identify how much money you need to save in order to achieve your goals.

**Why Do Bookkeeping By Year-End? **

The most important reason to do your bookkeeping by year-end is that:

• It allows accounts to streamline and track their yearly progress and maintain records because they get preoccupied with the new year's business. This is the most important time to take stock of what's been spent (income and expenses), so you can better manage your resources in the future.
• Another key reason is that you can use your year-end bookkeeping as preparation for taxes. This will save you a lot of headaches and time come tax season. When all your documents are in order, and you understand your business's financial position well, filing taxes becomes much simpler.
• Additionally, year-end bookkeeping provides valuable insights that can be used to make informed decisions about the future direction of the business. This is because it gives you a clear picture of your business's financial position and allows you to track your progress over a twelve-month period. Additionally, it also allows you to take advantage of deductions and credits that you may be eligible for.
• Lastly, given that accountants have their handful with the year closing and tax filing dues of their customers. Their last-minute involvement fees go exponentially high leading to a loss on your side. So, it's always better and economical to do your bookkeeping by year-end yourself.

The Complete Year-End Bookkeeping Checklist For Small Businesses

Now that you've realized the essentiality of bookkeeping and why it cannot be overlooked, let's take a look at the below-suggested points for a comprehensive handheld year-end bookkeeping checklist that can help you and your small business exponentially. First, let's take a look.

1. Collect All Invoices & Receipts

This is the first and foremost step in the bookkeeping process. All the invoices and receipts related to your small business transactions need to be collected and sorted in an organized manner. This will help you maintain a clear record of your income and expenses.

2. Get Books Caught Up

If you're behind on your bookkeeping, now is the time to get caught up. This will help you have a clear and accurate picture of your business's financial position. You do this by ensuring that all transactions are recorded in your books and that your books are up to date.

**3. Collect & Create Financial Forms **

The next step is to collect and create all the necessary financial forms. This includes balance sheets, income statements, cash flow statements, etc. This will help you track your progress and performance over a period of time.

4. Reconcile Your Bank Statements

This step involves (link: https://fincent.com/blog/why-bank-reconciliation-is-important-for-your-business-and-how-you-can-do-it text: reconciling your bank statements) with your books. This ensures that all transactions are accounted for and that there are no discrepancies. You can do this by comparing your bank statements with your records and ensuring that all transactions are accounted for.

5. Get Open Payments Closed

If you have any open payments, now is the time to close them. This includes invoices that are due, bills that need to be paid, etc. This will help you keep track of your expenses and ensure that all payments are up to date.

6. Take Account Of The Inventory

If you have any inventory, now is the time to consider it. This includes counting all the items in your inventory and valuing them. This will help you keep track of your assets and ensure that they are accounted for.

7. Review Financial Statements

The next step is to review all your financial statements. This includes your balance sheet, income statement, cash flow statement, etc. This will help you identify any areas of concern and make necessary changes.

8. Create Tax Plan

The next step is to create a tax plan. This includes estimating your taxes and determining how you will pay them. This will help you ensure that you are prepared for tax season and that you do not owe any money.

How Can Fincent’s Financial Software Help You Complete Your Year-End Bookkeeping Checklist?

As the end of the year approaches, businesses must complete a number of tasks to close out their books and prepare for the new year. This can be a complex and time-consuming process, but Fincent can help.

Fincent offers a range of features designed to streamline year-end bookkeeping for small businesses, including tools for tracking expenses, generating reports, and managing tax compliance. With Fincent, you can be confident that your books are in order and that you're ready to start the new year on the right foot. So let's have a look at the unique features of Fincent and how it can help you with your year-end bookkeeping checklist.

**1. Automatic Bank Feeds And Reconciliation **

One of the key features of Fincent is its automatic bank feeds. This feature allows you to connect your bank account to Fincent and automatically import your transactions. This saves you the time and hassle of manually entering data into your books. In addition, Fincent's reconciliation feature ensures that all your transactions are accounted for and that there are no discrepancies.

2. Generate Financial Statements

Another key feature of Fincent is its ability to generate financial statements. This includes balance sheets, income statements, (link: https://fincent.com/blog/everything-about-cash-flow-statements-definition-sections-examples text: cash flow statements), etc. This allows you to track your progress and performance over a period of time.

3. Categorization Of Expenses

Fincent also offers a categorization feature for your expenses. This allows you to categorize your expenses by types, such as advertising, travel, or office supplies. This helps you keep track of your spending and identify areas of concern.

**4. Easy-To-Use Reports **

In addition, Fincent offers a range of easy-to-use reports. This includes reports on your expenses, income, cash flow, etc. These reports can be generated automatically and emailed to you on a regular basis. This helps you stay on top of your finances and makes it easy to spot any issues.

5. Tracks the Cash Flow

Last but not least, Fincent tracks the cash flow. Knowing where the money is coming in and going out is important. This helps you make sound financial decisions.

Fincent is a powerful financial software that can help you streamline your year-end bookkeeping checklist. With its automatic bank feeds, reconciliation feature, and easy-to-use reports, Fincent can save you time and hassle in a simple, cleaner, and precise way that makes bookkeeping for your business a cakewalk. So why wait? Try Fincent today and see the difference!

Summing Up!

As the end of the year approaches, businesses must complete a number of tasks to close out their books and prepare for the new year. This can be a complex and time-consuming process, but Fincent can help with its features designed to streamline year-end bookkeeping for small businesses. These features include tools for tracking expenses, and generating reports. So let's have a look at the unique features of Fincent and how it can help you with your year-end bookkeeping checklist.

Fincent offers several features that can help simplify your year-end bookkeeping checklist, including- automatic bank feeds and reconciliation, the ability to generate financial statements, categorization of expenses, tax compliance features, and much more. So, if you're looking for a way to streamline your year-end bookkeeping checklist, Fincent is the perfect solution. With its one-of-its-kind range of features, you can start today by scheduling a demo with our team of experts. We hope that you enjoyed reading this blog.