Out with the old, in with the new! We’re in mid-December (where has another year gone?), and year end is once again looming for many businesses. No matter when your year-end is, keep reading below for some helpful year-end tips.
The end of one year and the start of the next is a time when most people reflect on the past year, and start thinking about and making plans for the next year, and your business is no exception. Your taxes aren’t due for another couple of months, but year’s end is a good time to start making preparations for another tax season.
Here are seven ideas for things to get caught up on for year-end:
- Year-end bonuses. Decide on who gets what, and make sure the appropriate taxes are withheld.
- Get your accounts receivable caught up (as much as you can). This is a good opportunity to get in touch with customers and request a cheque before year-end, to square things away on your end as well as theirs. You also want to get your invoicing for this year done in this year, as much as possible. This is also a good time to review customers—do you have customers who need to be moved to a cash basis? Customers who pay reliably, but longer than 30 days could be contacted and offered a small discount if they move to net 30.
- Get your accounts payable caught up. You can use this time to review your accounts payable procedures, too—are you keeping good track of your payables, and getting your payments out reliably and on time? Are you missing some steps, or in need of more help? It makes your balance sheets and profit/loss statements more meaningful when they have as much information as possible on them, and the information is as current as you can make it.
- Get your earned income and prepaid expenses in order. There will always be some income and expenses that are earned/incurred in one year and received/paid for in the next. These need to be handled carefully, to make sure you get the expense/income in the correct year.
- Don’t forget your fixed assets and capital costs! These will need to be updated in preparation for your income tax preparation as well.
- Prepare your payroll records. This can be a good time for clean-up in your employee database, too—review the information you have for your staff, remove staff who no longer work for you from the current payroll list, make sure your information for payroll is up-to-date with Revenue Canada.
- Get your records ready for your meetings with your accountant/tax preparer. The first step of doing your taxes each year is getting the information together—this can be done well before the April deadlines for Canadian income tax.
Your year-end accounting should not be left until the end of the year! Accounting is a critical, ongoing, living process that should be happening in your company on a daily basis. There are things that can only be done at the end of the year, once the totals for the year can be counted, but this should be a matter of running reports and gathering information. If you are running a professional business, you need to handle your daily accounting in a professional way.
Once you have your accounts in order for year end, another critical step that tends to be overlooked is reviewing them. It’s harder to know where you want to go if you aren’t looking carefully at where you are right now. This is a good time to sit down with your accountant and have a thorough look at your financial condition – balance sheet, profit/loss statement, cash flow statement - all these things need a review with a critical eye, and then move on to making your financial plans for next year, including updating your budget.
Contact Shaw & Associates Chartered Accountants to help you out with your year-end needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business.