Nov. 13, 2019

This paid piece is sponsored by Eide Bailly LLP.

It’s that time of year again. Planning commences as the year draws to a close. Preparing your accounting records for year-end will ensure you put your best foot forward in the new year, but it also will help you close out last year without a headache.

There are several items to consider as you prepare for year-end planning.

Balance sheet checklist

• Make sure your assets match your liability and equity on your balance sheet.
• Perform bank reconciliation for all cash, credit card and loan accounts through December/year-end. Are there any checks or deposits that have not cleared? Are they duplicates? Do you need to resend a check? Do we need to discuss unclaimed property? Where did the money for the uncleared deposit go?
• Make sure any checks for December that have not cleared are entered if you are on a cash basis.
• Make sure all customer invoices and accounts payable are entered if you are on an accrual basis. This ensures you’ve captured everything related to the current year.
• Gather copies of all fixed asset purchases and loan documents if any were financed.
• Look at your accounts receivable aging. Will everything be collected or is there some cleanup that needs to be done? Do you have any bad debt that needs to be written off or sent to a collection agency?
• Adjust inventory, prepaids, etc. as needed.
• Look at your accounts payable aging. Is there anything that you will not be paying or that was entered twice?
• Prepare copies of your W2s and W3s and provide them to your accountant.
• Look at your liabilities. Do your loans balance? Remember to include loan histories for your accountant if you don’t break out principal and interest every month.
• Make sure the December sales tax and payroll liability balance match your January payment.

Profit and loss checklist

• Do a quick check through your revenue. Are there any expenses entered to a revenue account that should go to cost of goods sold or an expense account?
• Provide your accountant with any 1099s your company has received.
• Review your expense accounts and determine if any 1099s should be prepared.
• Remember that any expenses over $2,500 should be a fixed asset. The safe harbor threshold for capitalization is $2,500. For instance, if you bought three computers that totaled $2,600, they would remain an expense as one item if not over $2,500. If you have an audit of your financial statements, this threshold may be different depending on your capitalization policy.
• Look through your miscellaneous or uncategorized accounts. Code to a proper expense account unless very minimal.
• Separate officer health from employee health insurance. If you are an S corporation, be sure to appropriately include this amount on the W-2s for the owners as required.
• Review your contribution accounts. Reclass any promotion/sponsorship items to advertising. Remember, only donations to qualified organizations are deductible. Your accountant will need a copy of your receipts. Also political contributions are not deductible.
• Look through your travel expenses. Make sure all meals are captured in a separate account.
• Review your meals and travel accounts. Be sure to separate any entertainment expenses into a separate account.

The importance of preparing your books for year-end

These are just a few of the items to consider as you prepare for year-end. Make sure you take the time to gather the correct information and talk with your business advise and/or accountant. That way, you can close out year-end and start 2020 right. Contact Eide Bailly’s Kristen Boyle with any questions.