There’s always so much to do at the end of the year: holiday preparations, family time, and planning for the new year. As a small business owner, you need to complete a long list of year-end accounts, financial statements, taxes, employee incentives and management reports.
It can be tricky to achieve a perfect balance between work and life as December 31 approaches. It’s estimated by cfo.com that the average accounting team takes 25 days to complete a year-end close. Devoting some attention to your business and reflecting on the past 12 months' financials, enabling you to step into the new year with clarity, purpose, and the drive to hit the ground running.
What actually needs to be done at year-end is to prepare ahead of time and simplify the closing process for informed decisions, legal compliance, and solid financial health. So where do you start?
Year-end Close Process for Smooth Transition into the New Year
For your 2024 tax return, you need to thoroughly review and reconcile all your financial accounts and transactions at the year-end. It involves checking and adjusting entries for:
- Income and expenses
- Assets and liabilities
- Equity changes
- Accruals and depreciation
- Bad debt provisions
- Tax adjustments to ensure accurate financial statements
Most Pressing Challenges in Year-end Close Process
The journey to a successful year-end close is often riddled with obstacles, primarily stemming from staff shortage and bandwidth issues like:
- Discovering unforeseen financial issues at the last minute can derail the entire closing process.
- Delayed or inaccurate data can lead to significant adjustments and rework.
- Issues that could have been identified and addressed in the month-end closes often go unnoticed until the year-end, magnifying their impact.
- Disorganized workflow can encounter potential misunderstandings, work delays, and glaring errors.
- The lack of financial documents, such as receipts and invoices, can cause inadequate accounting records.
We’ll discuss the ultimate checklist for closing your books at the end of the fiscal year that helps you to avoid these challenges and better manage financial transactions. Also, how you can embrace outsourced accounting partnership to do heavy lifting so you can get a complete, accurate financial records for your business.
A Small Business Year-end Accounting Checklist for Effective Closing
This checklist can ensure you are aware of what needs to be done to complete annual accounting tasks before the end of the year. With these off your plate, you can focus on the things that matter most.
Prepare a Closing Schedule
A year-end timetable is a detailed roadmap of key accounting tasks and deadlines essential for a smooth financial close. It serves as a guide, ensuring you’re well-prepared for audits and staying on track throughout the process. In fact, nearly 75% of organizations dedicate time annually to planning for future success.
To create an effective closing schedule, follow these steps:
- List year-end tasks
- Set realistic deadlines
- Assign tasks to the team
- Regularly update the schedule
Start by creating a clear timeline that highlights key dates and allows ample time to gather and organize necessary documents for accurate record-keeping.
