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Small Business End of Year Preparation

VIEWS: 9 PAGES: 2

									?By: Fran McCully, Financial Strategist

The process of tax preparation can be a bit intimidating for small business owners.
With a few simple steps you can avoid problems with your Tax Returns.

We have provided several basic check lists below that will assist you in your year-end
preparation.

Save Receipts: Even small purchases should be tracked with receipts. While the
government does not require you to keep receipts for expenses less than $75.00, you
will have to know the circumstances of the expense. They will want to know where
the expense came from and why you needed it for business reasons. Thus, it is much
easier to keep a receipt than to remember this information or keep track of it in some
other way. Get a file for receipts and put everything in their throughout the year.

Any business expense that is ordinary and necessary can be deducted from your
business taxes.

General Year end preparation: When you get close to the end of the year, there are
several things you can do to lower your tax bill.

 Evaluate your cash flow situation and decide whether or not you can afford to make
any purchases.
 If you are in a good cash flow situation, it may be to your advantage to purchase
some things that you are going to need next year. You could stock up on supplies, pay
any bills that you may have or buy new equipment

Remember the more expenses you can generate, the lower you tax burden is going to
be.

Year-End Accounting Checklist

Sometimes it helps to have a checklist to follow in order to complete Year-End Tasks.
Here are a few things to ask yourself when doing your Year-end financial statements.

 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 companys inventory balance correctly stated?
 Are there inventory items that cost more than theyre worth and should be written
down to their market value?
 Are there any prepaid items that need to be adjusted such as prepaid insurance?
 Have all assets been reviewed for accuracy?
 Have we recorded all of our payables?
 Are there other debts that have not been included on the books?
The last step of the year-end process is to check your sales, cost, and expense
accounts. Compare to prior years to see if any increase of decrease is reasonable. If
you run across significant changes, you may want to look at the general ledger for that
account to ensure the entries are legitimate.

Financial Check list

  Has your life changed? Marriage, a baby, moving or a new job. You may need to
change your budget to take these into consideration.
  Retirement Fund. Its a good idea to contribute as much as you can to tax-advantage
plans
  Taxes. Do any recent changes affect you?
  Evaluate your debt. What do you owe? Try to consolidate your bills. The first ones to
pay off are those that carry high interest.
  Check your will. Is it up to date? Does it reflect your true wishes?
  Think about insurance. How is your insurance coverage for home or rental, for life
and disability?
  What about the children? Talk about establishing an education savings account or
taking advantage of a 529 college savings plan.


Fran McCully, Financial Strategist and Bookkeeper
Your Administrative Solutions

fran@youradministrativesolutions.com

Setting Business People Free

								
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