Bookkeeping Updates: Get Your Books Ready Before Year-End

As the end of the year quickly approaches, it’s crucial to take a few steps to ensure your financial records are in order. Many people put off updating their books, but doing so before year-end can help you avoid scrambling in the new year and ensure your tax filings are accurate. As an Enrolled Agent with over a decade of experience in tax preparation, I want to guide you through some key tasks you can complete to close your books for 2024 smoothly. Let’s go over the essential steps you should take to prepare your books and ensure you are ready for tax season.

Make Adjustments and Reconcile Your Accounts

A critical part of preparing for year-end is making sure your books reflect accurate, up-to-date information. Start by reviewing all your transactions for the year and making any necessary adjustments. Double-check that all expenses, revenues, and deductions are properly recorded. For example, ensure that any purchases made in the last quarter are included, and that any prepaid expenses have been appropriately allocated over the period they cover.

Next, reconcile your cash accounts. This includes checking your bank and credit card statements against your general ledger. Any discrepancies should be investigated and resolved. The goal is to ensure that your accounting records match up with what’s actually in your bank accounts. Reconciliation is essential for accurate reporting, so don’t skip this step. If you’re dealing with more complex transactions, consider using accounting software that can help automate some of the reconciliation processes.

Get Your Cash and Accounts Receivable in Order

Before the year ends, it’s important to make sure your cash flow is accurately reflected in your books. Review your accounts receivable (AR) to confirm that all payments owed to you have been recorded correctly. If there are any outstanding invoices, follow up with clients to get payments processed before the end of the year. This will help reduce your outstanding receivables, keeping your books clean and up-to-date.

If you run a small business, ensure that your cash position is accurate. Cash flow is a major factor when it comes to tax planning, and ensuring that cash on hand is reflected properly in your financial records can save you time and headaches later. Look at any potential adjustments needed for accounts payable (AP) as well—make sure all bills that need to be paid before year-end are taken into account and that they are booked accurately.

Review Your Tax-Related Documents

At the year’s end, one of the most important things you can do for your business is review tax-related documents. You should be getting ready for any year-end filings and tax deductions. Review your general ledger to ensure you’re claiming all allowable business expenses, such as employee benefits, office supplies, and any recent purchases that can be written off.

In addition, check any relevant tax forms that need to be filed, such as 1099s for contractors, or review any depreciation schedules for fixed assets. It's important to understand how these documents and deductions will affect your tax filings for the year. Take note of any items that require attention, as they will impact your 2024 tax return.

If you have employees or contractors, make sure their information is up-to-date, and prepare for W-2 and 1099 filings, respectively. These forms need to be prepared accurately to avoid errors on your tax return.

Wrapping Up Your Year-End Bookkeeping

By following these key steps—adjusting your records, reconciling accounts, and reviewing tax-related documents—you will set yourself up for an efficient tax season. Don’t wait until the last minute to clean up your books! Taking the time to go through these tasks now will not only help you file taxes smoothly, but it can also provide you with a clearer picture of your business’s financial health heading into 2025.

If you need help with getting your books ready or have questions about any of these tasks, don’t hesitate to reach out to us at info@mkhstaxgroup.com. We’re here to assist with all your bookkeeping and tax needs, ensuring that your business stays on track.