Rebound into a Brand New Year!

Close out Your Books and Hit the Ground Running
2011 is weeks away. Can you believe a whole year went by?  Closing out your financial statements for the year before you launch into the next one is as important as packing your bags before a vacation. Hitting the ground running when you start the new year with all the details handled will mean you won't have to dig for statements and add stress to your life when it’s time to file your tax returns.  Here's our handy dandy checklist that will make closing your year-end books easy and accurate. 
2010 Tax Checklist GuyA WORD ABOUT YOUR YEAR END CHECKLIST
Before putting the books away for the year, make sure you run the financial statements and review them to identify anything that looks too high or too low. Going to Hawaii without your swimsuit and shorts isn't a bad thing, but you'll pay tourist prices to get them on the spot.  Reviewing your statements and balances before you begin the 2011 business year will save time and money in the long run.
REVIEW
Review completed financial statements and the balances of each account, including the subsidiary ledger balances; Accounts Payable and Accounts Receivable. Throughout the review ask the question, “Do these balances seem reasonable?” “Are there any other assets or liabilities that I haven’t included?”
REMEMBER 
Sometimes during the year it's can be easy to forget an item that was not recorded into the accounting system especially if it has been purchased with personal monies.
DOUBLE CHECK
Finally, the last step of the year-end process is to check your Sales, Cost, and Expense accounts. Compare them to prior years to see if any increase or decrease is reasonable. If you run across some significant changes, you may want to look at the general ledger detail for that account to ensure the entries are legitimate.
Year-End Accounting Checklist 
  • Does my general ledger bank balance reconcile to the bank statement?
  • Are there any accounts receivables that are worthless and should be written off?
  • Is the balance in Allowance for Bad Debts a reasonable estimate of potential writeoffs?
  • Is the company’s inventory balance correctly stated?
  • Are there inventory items that cost more than their worth and should be written down to their market value?
  • Does the company still have all the fixed assets? If not were they sold or scrapped.
  • Is my depreciation correctly recorded for those fixed assets still in the company’s possession?
  • Did I amortize goodwill and franchise fees?
  • Are there any prepaid items that need to be adjusted such as prepaid insurance?
  • Have all asset accounts been reviewed for accuracy?
  • Have we recorded all of our payables?
  • Do the payroll tax liabilities coincide with our quarterly reports?
  • Do the balances in the notes payable accounts (loans) agree with what the banks say we owe?
  • Are there other debts that have not been included on the books?
  • Are there debts on the books that no longer exist because of forgiveness or oversight?
As you follow this year-end process you will be amazed at how much you learn. You’ll see trends and practices that will help you in running your business more effectively.
So, this year, take the time and make the effort to be precise so that you can go into 2011 with reliable balances and peace of mind.
Happy Holidays from KCB Accounting Services and Liberty Tax!!