66: Bookkeeping And Tax Strategies For Wrapping Up The End Of The Year Whether You Are Starting A B

66: Bookkeeping And Tax Strategies For Wrapping Up The End Of The Year Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Remote Virtual Online Bookkeeper, Virtual Assistant Or VA

If you have a business or do bookkeeping for business owners, you know now is the time you need to wrap up your year-end financial statements. If you’ve heard the phrase closing the books, this is exactly what it means. You simply make sure you have all your money coming in and money going out of your business recorded and reconciled so that your financial statements reflect accurate data. You will use this data to prepare your tax return, so it is extremely important that you do this correctly. In today’s podcast episode, you’ll learn the top tasks you need to do to close out your books whether you are using a computerized software system like QuickBooks, Xero, Wave or FreshBooks for your business finances, or if you are doing your bookkeeping manually with an Excel spreadsheet or even a Google Document. Many of the processes are the same regardless of which system you use to do your bookkeeping. Having your financial statements and your bookkeeping ready so that you can have your tax return prepared on time with little to no stress is the ultimate goal here. Whether you are just getting started with your business, you are a self-employed individual, a solopreneur, entrepreneur, small business owner, a remote, virtual, online or in-house bookkeeper, or a virtual assistant or VA, I want you to make sure you are prepared to file your taxes on time feeling confident that you have accurate data. If you’ve ever wondered what you need to do to finalize your end of the year bookkeeping and financial statements, listen in as I walk you through the steps you need to take today...

Apply to join the Mastering Your Small Business Finances CEO Mastermind or the Elevate Your Bookkeeping Business GROW Mastermind group:

https://www.financialadventure.com/mastermind

Grab Your FREE guide: 5 Essential Strategies For Stress-Free Bookkeeping:

https://www.financialadventure.com/5essentials

Looking for a payroll solution for your business? You can get an exclusive 15% discount on your payroll services when you sign up here:

https://www.financialadventure.com/adp

Looking for an extremely beneficial online bookkeeping resource? Join us in our Mastering Your Small Business Finances Membership where you can ask questions and get answers regarding your specific business. We dive deeper into the topics on this podcast, provide additional resources and accountability:

https://www.financialadventure.com/mysbf

Fill out the Contact Us form if you have a question or need help with your bookkeeping or payroll:

https://www.financialadventure.com/contact-us

Your FREE Online Virtual Bookkeeping Business Starter Guide & Success Path is waiting for you:

https://www.financialadventure.com/starterguide

Sign up for a virtual coffee chat to see if starting a Bookkeeping Business is right for you:

https://www.financialadventure.com/discovery

Join Our Facebook Community: https://www.facebook.com/groups/womenbusinessownersultimatediybookkeepingboutique

Are you a bookkeeper looking to start, grow or scale your bookkeeping business? Join our FREE bookkeeper community here:

https://www.financialadventure.com/bookkeepercommunity

QuickBooks Online - Save 50% Your First 3 Months:

https://www.financialadventure.com/quickbooks

Show Notes:

If you have a business or do bookkeeping for business owners, you know now is the time you need to wrap up your year end financial statements. If you’ve heard the phrase closing the books, this is exactly what it means. You simply make sure you have all your money coming in and money going out of your business recorded and reconciled so that your financial statements reflect accurate data. You will use this data to prepare your tax return, so it is extremely important that you do this correctly. In today’s podcast episode, you’ll learn the top tasks you need to do to close out your books whether you are using a computerized software system like QuickBooks, Xero, Wave or FreshBooks for your business finances, or if you are doing your bookkeeping manually with an Excel spreadsheet or even a Google Document. Many of the processes are the same regardless of which system you use to do your bookkeeping. Having your financial statements and your bookkeeping ready so that you can have your tax return prepared on time with little to no stress is the ultimate goal here. Whether you are just getting started with your business, you are a self-employed individual, a solopreneur, entrepreneur, small business owner, a remote, virtual, online or in-house bookkeeper, or a virtual assistant or VA, I want you to make sure you are prepared to file your taxes on time feeling confident that you have accurate data. If you’ve ever wondered what you need to do to finalize your end of the year bookkeeping and financial statements, listen in as I walk you through the steps you need to take today...

Welcome Back…Closing the books or finalizing your financial statements is something you need to do so that you know you have accurate information to report on your tax return. This is the process to make sure that all your financial transactions are recorded, up to date and accurate. If all this talk about financial statements and taxes is starting to raise your anxiety, I want you to take a deep breath in and release it slowly. This does not need to be hard or stressful, especially when you know exactly what you need to do, and you have someone you know you can trust to help you out if you get stuck. I understand you may have lots of questions, and that is why I am here for you. Sometimes all you need is to be pointed in the right direction, and that’s exactly why I wanted to talk about this topic today.

You might be asking why I think now is the best time to close out your books or finalize your financial statements, and simply put, it is normally when you have received your bank and credit card statements, you can have all your transactions recorded for the year and then can reconcile to ensure you have everything accounted for. It is when you can make any final adjustments so that all your balances are correct. You will also need to have certain information recorded so that you can keep up with compliance matters such as issuing any 1099s by January 31st. If you don’t have all your information recorded, how will you know how much you have paid your vendors? Making sure you have everything caught up by mid-January will help you meet these and other compliance deadlines as well. I’ve covered what 1099s are and what you need to do to file them in a previous podcast episode. If you’d like, you can go back and listen to that episode so that you know what your business is required to file.

We’re going to start off with touching on what your financial statements include. There are two main reports you will need to file your tax return. The first is your Balance Sheet and the second is your Profit & Loss Report or your Income Statement. Either of these two titles refer to the same report. I’ll refer to this report throughout this podcast as your Income Statement. These two reports will encompass everything you record in your bookkeeping within your business.

The first step I want you to take in closing you’re your books is to make sure that you have recorded all of your invoices for the year. Once these invoices have been recorded, make sure that you look over your Accounts Receivable balances. These are the amounts that your customers owe you. If you find that any of your balances are off, you need to make adjustments, so they are reflecting the correct balance as of the end of the year. If you have balances that you know you will never be able to collect on, you can write these off as bad debt. Your Accounts Receivable balance shows up on your Balance Sheet in your Asset section since it reflects money you will be receiving in the future.

Next, you should do this same process for your bills. Once you have recorded all your bills or payments to vendors, you can look over your Accounts Payable balances to ensure they are all accurate as well. If you need to make any adjustments, now is the time to do this. Your Accounts Payable balance shows up on your Balance Sheet in your Liability section since it includes amounts that you need to pay.

If you have a credit card for your business, I want you to make sure you have recorded all the transactions through the end of the year. Your credit card balance will show up on your Balance Sheet in the Liability section as well since this balance is also a balance you will need to pay in the future.

Once you have received your bank and credit card statements, it is time to reconcile them. This is something I recommend you do on a monthly basis so that when you get to the end of the year, you only have your last month to reconcile. If you are behind, make sure you reconcile each month to ensure you have captured every transaction. Many clients will miss bank service charges or interest when they are not reconciling their bank statements. When you are reconciling your statements, watch for any outstanding withdrawals or deposits. If you see outstanding transactions make sure that they are still going to clear. This is where many clients will find missing or duplicate entries if they are using a computerized software system for their bookkeeping such as QuickBooks. If you find you need to make adjustments on any outstanding transactions make sure you do this before you close out your books.

Now it’s time to look over your Balance Sheet. I recommend taking a look at your Balance Sheet to make sure that every account that is listed has the correct balance. You will start with your asset section. If you have reconciled your bank accounts and cleared up any outstanding transactions, these accounts should be correct. You will also see your fixed assets, accounts receivable and inventory if your business has these accounts. Next look over your liability section. Here you will see balances such as your accounts payable, credit card payable, p