Year-End Accounting Checklist for Confident Business Closure

Closing out the financial year is more than just a routine task—it’s a pivotal moment for any business. At our firm, we understand that thorough and accurate year-end accounting is crucial for maintaining financial stability and ensuring compliance. Our comprehensive year-end accounting checklist is crafted to help you achieve a confident business closure, covering all the essential steps from financial statement preparation to tax compliance.

1. Review and Reconcile Accounts

Ensuring accuracy in your accounts is the bedrock of sound financial management.

Bank Reconciliation: We start by meticulously reconciling all bank accounts. This means comparing your bank statements with your accounting records to pinpoint and rectify any discrepancies. It’s about ensuring every dollar is accounted for.
Accounts Receivable and Payable: Next, we verify the balances of accounts receivable and payable. This involves a thorough check to confirm that all invoices are accurately recorded and accounted for. By doing so, we help you maintain a clear picture of your cash flow.

2. Prepare Financial Statements

Your financial statements tell the story of your business’s performance over the year. We make sure that story is precise and insightful.

Income Statement: We compile your income statement, detailing your business’s revenue and expenses for the year. This document is crucial for understanding your profitability.
Balance Sheet: We prepare a balance sheet to provide a snapshot of your business’s financial position. This includes assets, liabilities, and equity, giving you a clear view of your financial health.
Cash Flow Statement: We generate a cash flow statement to illustrate the inflow and outflow of cash, which is vital for assessing your business’s liquidity and financial resilience.

3. Review and Adjust Journal Entries

Accuracy in journal entries ensures your financial statements truly reflect your business activities.

Accruals and Deferrals: We make necessary adjustments for accrued expenses and deferred revenue to match the correct accounting period. This helps in presenting a realistic financial position.
Depreciation and Amortization: We review your depreciation schedules and amortization for any required adjustments, ensuring all assets are correctly valued.

4. Conduct a Physical Inventory Count

Knowing what you have in stock is fundamental to managing your business effectively.

Inventory Valuation: We perform a year-end physical inventory count to ensure that your inventory records are accurate. Adjusting inventory valuation as needed reflects actual stock levels and prevents discrepancies.

5. Evaluate Fixed Assets

Your fixed assets are significant investments, and their accurate valuation is critical.

Asset Verification: We verify the existence and condition of fixed assets. This includes updating your fixed asset register with any new acquisitions or disposals.
Depreciation Review: We ensure that all fixed assets are properly depreciated according to your accounting policies, maintaining accurate asset values.

6. Review Payroll Records

Payroll is not just about paying employees—it’s about accurate record-keeping and compliance.

Payroll Reconciliation: We reconcile payroll records with your financial statements, ensuring all payroll taxes and benefits are accurately recorded.
Year-End Tax Forms: We prepare and distribute necessary year-end tax forms, such as W-2s and 1099s, to your employees and contractors, ensuring compliance with tax regulations.

7. Assess Tax Compliance

Taxes are a significant part of your financial responsibilities. We help you stay ahead of your obligations.

Tax Liability Review: We review your tax liabilities to ensure all taxes are paid or scheduled for payment. This includes income tax, sales tax, and payroll tax.
Tax Return Preparation: Gathering all necessary documentation for your year-end tax return, we consult with tax professionals to ensure compliance with current tax laws, minimizing the risk of penalties.

8. Close Out the Accounting Period

Finalizing your accounts ensures that your financial records for the year are complete and accurate.

Final Adjustments: We make any final adjusting entries to ensure your financial statements accurately reflect your business activities for the year.
Lock Accounting Period: Once all entries are finalized, we lock the accounting period to prevent further changes, safeguarding the integrity of your financial data.

9. Plan for the Next Fiscal Year

Planning is essential for future success. We help you set the stage for the coming year.

Budget Preparation: We develop a budget for the upcoming fiscal year based on your financial performance and projections, providing a roadmap for your financial activities.
Set Financial Goals: We establish financial goals and objectives to guide your business’s growth and stability, ensuring you have clear targets to aim for.

10. Seek Professional Advice

Professional advice can make a significant difference in managing your finances effectively.

Consult with Accountants: We regularly consult with your accountant or financial advisor to review your year-end accounting checklist and address any complex issues. Their expertise ensures that you’re on the right path.
Audit Preparation: If your business requires an audit, we ensure all documents and records are prepared and readily available for the auditors, facilitating a smooth audit process.

How We Can Help

We offer a range of services to help businesses like yours navigate the complexities of year-end accounting. Here’s how we can assist you:

Initial Consultation (2 hours)
- Understand your business and financial goals
- Identify key areas that need attention for year-end closure
Comprehensive Year-End Review (6 hours)
- Reconcile bank accounts and verify receivables/payables
- Review and adjust journal entries, including accruals and deferrals
- Prepare and review financial statements (Income Statement, Balance Sheet, Cash Flow Statement)
Physical Inventory Count Assistance (3 hours)
- Guide and support in conducting a physical inventory count
- Adjust inventory records based on actual stock levels
Fixed Assets Evaluation (2 hours)
- Verify and update fixed asset register
- Review depreciation schedules
Payroll Records Review (2 hours)
- Reconcile payroll records with financial statements
- Prepare year-end tax forms for employees and contractors
Tax Compliance Check (3 hours)
- Review tax liabilities and ensure all taxes are scheduled for payment
- Gather documentation for tax return preparation
Final Year-End Adjustments and Closing (2 hours)
- Make final adjusting entries
- Lock the accounting period
Next Fiscal Year Planning (2 hours)
- Develop budget and set financial goals
- Provide guidance for a successful start to the new year
Monthly Maintenance and Review (3 hours/month)
- Ongoing reconciliation and financial review
- Ensure continuous compliance and financial accuracy

Final Thoughts

Implementing this year-end accounting checklist will help you achieve a confident business closure, ensuring that all financial aspects are accurately documented and compliant with regulatory requirements. Our meticulous approach to year-end accounting provides a solid foundation for your business’s financial health and future success. If you found this article helpful, please help support The Schlott Company by sharing it on social media. Let’s make this year-end not just a routine task, but a stepping stone towards greater financial stability and growth.