Yearly Bookkeeping Tasks
We have gone over the monthly and quarterly bookkeeping tasks and next up is the yearly bookkeeping tasks required to effectively manage your business. If you are keeping up with your weekly, monthly, and quarterly bookkeeping tasks, the yearly tasks will be minimal. The yearly bookkeeping tasks include preparing for 1099 filings, reviewing financial statements, closing out the year, gathering & sending Year End Records to your Accountant, setting up strategy for upcoming year, and filing 1099’s.
1. Prepare for 1099 Filings
Prior to the end of December, you will need to review all your vendors that you have made payments to and determine if they will require a 1099 at the end of the year. You will need to look at each of your vendors to determine if you have paid them over $600 this year and if they are a contractor that is a sole proprietor, a LLC (and has not taken the S Corp election), LLP, and PC or if anyone you pay to do things that aren’t on your payroll. If you determine which vendors will require a 1099, you will need to get a W-9 from them if you do not have one already.
2. Review Financial Statements
In November, you will want to review your Income Statement, Balance Sheet and Statement of Cash Flows. Many accountants will want to review them to determine if any adjustments need to be made for end of year payroll taxes for business owners. This will also give you an idea of your success throughout the year thus far.
3. Closing Out the Year
This involves finalizing your transactions in your accounting software, reconciling your bank statements, and finalizing your financial statements for the month of December and then preparing and finalizing your year end financial statements.
4. Gather and Send Year End Records
Once December is closed in your accounting system. Your accountant will need your Income Statement, Balance Sheet and Statement of Cash Flows for the entire year. Depending on the type of entity of your business, your accountant may require additional information. Some business entities will file a tax return, and some will not, and the information will be used to file the business owners personal tax return.
5. Set Up Strategy for Upcoming Year
As the year comes to an end, this is a great time to sit down and create a strategy for the upcoming year. This strategy can include creating a budget, learning to manage your cash flow, creating a new marketing campaign to increase revenue, setting aside 3-6 months’ worth of expenses and reviewing your past financial history to project future cash flow. This can also include creating goals for other areas of your business not directly associated with your finances.
6. File 1099s
After you determine which vendors/individuals will require the 1099s, the W-9s have been received, and you confirmed the information provided is corrected, you will need to make sure that the 1099s are completed, filed, and sent to the vendors/individuals prior to January 31st of the following year. Penalties may apply if completed after this date.
Monthly bookkeeping is an important task for every business owner, whether you have someone to assist or you are keeping up with it yourself. These yearly tasks are very simple and straightforward if you can keep up with your monthly and quarterly tasks. This will help you stay organized and make the end of the year a little less stressful. I hope you have found some benefit in this series on bookkeeping tasks.
The next series will be on personal finances! I am very excited about this one!!!!