As 2024 wraps up,
it’s the perfect time to prepare your finances for the year-end. Even if you are not a numbers person, this straightforward checklist will help you manage your year-end accounting smoothly.
1. Record all transactions
Start by making sure every transaction from the year is logged. This includes all sales, purchases, expenses, and payments. Keeping accurate records is key to understanding your financial health and ensuring nothing gets overlooked.
For example,
if you purchased office supplies in March or received a payment from a client in July, ensure these are logged in your accounting system. Just as you would jot down every coffee purchase or grocery bill to stay on budget, you need to record every business transaction.
2. Do a bank reconciliation
You should match your bank statements with your financial records. This process, known as bank reconciliation, helps you to identify and correct any discrepancies between your records and your bank’s records, ensuring accuracy.
For example,
if your bank statement shows a payment of $500 for a vendor, ensure that this amount matches your records. If there are any gaps, like a missed transaction or an error, reconcile these differences to maintain accurate records.
3. Review your financial statements
Take time to review your financial statements: your balance sheet, income statement, and cash flow statement. These documents give you a snapshot of your business’s financial position and help you see how things have been going throughout the year.
For example,
if your balance sheet shows $10,000 in assets and your income statement shows a net profit of $5,000, check that these figures align with your recorded transactions.
4. Check your accounts receivable and invoices
Make sure you have collected all the money you are owed, and your invoices are up to date. This will help you to avoid missing any payments and keep your cash flow on track.
Take an example,
if you sent out invoices to three clients total of $2,000, make sure you have received payments for these invoices or follow up with the clients who haven’t paid yet.
5. Check your accounts payable
Verify that all your bills have been paid and your accounts payable are current. Keeping track of what you owe and making sure you have paid everything on time helps prevent any issues with vendors or suppliers.
For example,
if you have an outstanding bill of $1,200 for utility services, check that this bill has been paid and is reflected in your records to avoid any late fees or service interruptions.
6. Perform an inventory count
If your business involves physical products, do an inventory count to ensure your records match your actual stock. This helps you spot any discrepancies and ensures your financial statements reflect accurate inventory levels.
For example,
if your inventory records show 500 units of a product but your physical count shows only 475, investigate the discrepancy to ensure accurate reporting.
7. Take time to reflect (Important)
Spend some time reflecting on the past year. Consider what strategies worked well and where there’s room for improvement. This reflection can provide valuable insights for setting goals and making decisions for the coming year.
For example,
if you had a goal to increase sales by 20% and you only achieved 10%, use this insight to adjust your strategies for the next year.
8. Send info to your accountant
Finally, gather all your financial documents and send them to your accountant. They’ll use this information to prepare your year-end reports and handle tax filings. Having everything organized will make the process smoother for both you and your accountant.
For example,
provide them with your bank statements, transaction records, and any receipts for business expenses.
How DCAM can help?
If you find yourself needing a bit more guidance, DCAM is here to assist. Our team can help you through these steps, ensuring your year-end accounting is handled efficiently and accurately. By following this checklist, you’ll be well-prepared for the end of the year. It’s all about staying organized and reflecting on your financial journey to set yourself up for success in 2025.
For any inquiries, feel free to call us at 905-843-4445 or email us at info@dcamgroup.ca.