How to get your business ready for year end
Year end can be one of the busiest times for a small business as they work to get their accounting affairs in order. Read below to learn how to help relieve bottlenecks in your accounting reporting by driving an efficient workflow in your business year-round.
It starts at the beginning of the year
It almost goes without saying that the best way to plan for a smooth year end is to plan early, start off on the right foot and deliver consistent service to clients throughout the year.
This involves making sure each month your accountant has the information they need to reconcile your business’s accounts.
Top tip: Ask your accountant to put together a bookkeeping checklist for you that you can tick off when you hand over your monthly files. This is particularly helpful if your business doesn’t have an internal accountant to liaise with.
Create a year end countdown
Preparing for the financial year end can be a lot of extra work on top of the day job, so create a year end countdown with calendar reminders and a progress chart.
Brief your employees on the fact that it’s year end and encourage them to do everything they can to tighten expenditure, collect purchase orders and invoices, file expenses, and clinch every last order.
Make sure your accounts are up to date
Every column of figures in your financial accounts should add up correctly and tally with all your invoices, bills, paying-in books and bank statements.
List sales made before the year end, but not yet paid for, as outstanding debtors. Include the amount, invoice number and invoice date.
If there are any invoices that you suspect may not be paid, write a note of them with a brief explanation.
You don’t have to run the year end specifically on the last day of the year. Most businesses wait until they have processed all of the payments and receipts for the year they are closing.
Check your chart of accounts
The chart of accounts, or COA, defines which accounts relate to your profit and loss report and which relate to the balance sheet.
Ultimately at year end, the COA controls which accounts are cleared down for the new year so it’s important to make sure it’s right.
Ensure your employee data is up to date
Be sure to also keep track of all expense claims and ensure employees attach the correct receipts to their expense forms throughout the year.
Do your housekeeping
Make sure your files are all in order and your invoices, receipts and statements are filed and stored neatly where you can find them – either as hard copies or online.
Clear communication with your bookkeeper
As a small business owner, it’s likely that the two times of year that you will talk to your external accountant or bookkeeper the most are at tax season and year end.
During these busy times, it’s important that you let your accountant know what your expectations are in terms of communication. Think about the time of the month you wish to check in, the format of the files you prefer to receive, while also specifying if you have any bespoke reporting needs. An example of this could be if you are expecting some deeper analysis from your accountant regarding the financial health of your business, as opposed to having a bookkeeper that just files your taxes.
Once again, by establishing a mutually agreed SLA at the beginning of your relationship you are setting yourself up for success.
Use cloud accounting software
One of the big problems at year end is that it’s still a regular business month too! You still have the same requests as they would for November. By moving your business to a cloud accounting software solution you can benefit from having real-time access to your accounts. This allows you to retrieve information from the cloud unaided by your accountants or bookkeepers, allowing them to focus on getting the year end tasks sorted.
Check your data and create a backup
If you’re using accounting software it has a data checking routine that will tell you if there are any problems. Run it now and make sure you tackle any errors early. If you have no errors, take a backup so you can always get back to where you started.
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