By Adrian Emerson, accounting associate
Preparing for the end of the year can be hard, especially as the office begins to empty for the holidays. What can you do to make your end of year be smoother? Start as early as you feasibly can. I recommend starting to prepare at the beginning of your fourth quarter. Waiting until the last minute can delay the process and you don’t want to start the new year off on the wrong foot.
Here is a list of items that you should look at during your fourth quarter that you will probably need at the end of the year.
The first thing you should look at is your budget for the remainder of the year. Look for any budget items that are still outstanding, like an unfinished project, or any items that you have overspent on that will need to be cut back on until the new year starts.
After looking at any outstanding budget items you should start pulling data to prepare your budget for the next year. When pulling data I recommend pulling a copy of the current year’s financials and at least one previous year’s financials for comparison of trends. While you are planning for the next year, you should also consider any large scale projects you wish to complete in the next year or future years and start budgeting for them. As well, you should also make a note of where you want to be financially at the end of the next year, such as if you want to have a certain amount of funds in savings.
Review Current Year Financials for Errors:
You should also internally review your financial statements for any potential errors or odd items that might need explaining. Any items that look off should be researched and corrected, if needed. You should also make sure you have all appropriate documents for all transactions, if required by your financial policies. While you are completing your review you should verify any deferred revenue or prepaid expenses and make sure you have the correct information regarding which year or period the item is for so that it is posted correctly when that year or period begins.
The next task is to make a list of all the 1099s and W-2s you will need to submit at the beginning of the next year. Remember these forms are based on payments made during the current year, not bills received. Once your list is complete you should verify that you have a copy of a W-9 or W-4 for each individual or organization. Any forms you are missing should be requested as soon as possible so you don’t miss the IRS submission deadline in January. I also recommend verifying the mailing address for any individual whom you haven’t made a payment to in over six months.
If you don’t have a CPA or aren’t planning on using the same one you used last year, you should look into new options early. Various CPAs offer different tax preparation and financial review, preparation and auditing services. You should choose a CPA who offers the right services for your organization and get references and quotes up front. As soon as you select the right CPA for your organization, go ahead and have a contract written and verify what documentation the CPA will need to complete their services. You should have said documentation available to them as soon as possible, once the new year has begun.
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