The fourth quarter is here, which means the end of the year will arrive before many business owners realize it.
Between serving customers, managing daily operations, and preparing for the holidays, bookkeeping can easily fall behind. However, reviewing your financial records now can help you avoid unnecessary stress when tax season approaches.
Here are five areas every small-business owner should review before year-end.
1. Make Sure Your Transactions Are Recorded
Start by confirming that your business income and expenses have been entered into your bookkeeping system.
Look for:
Missing income or customer payments
Business purchases made with a personal account
Recurring software subscriptions
Bank fees and payment-processing fees
Mileage and other business-related expenses
Recording these transactions now gives you a more accurate picture of your business’s financial performance.
2. Review Unpaid Customer Invoices
If you invoice customers, review your accounts receivable report or outstanding invoice list.
Ask yourself:
Which invoices are still unpaid?
Are any payments overdue?
Have any customers made partial payments?
Do you need to send payment reminders?
Following up before the holiday season may help you collect outstanding balances before the year ends.
3. Reconcile Your Bank and Credit Card Accounts
Reconciliation means comparing the transactions in your bookkeeping system with your bank and credit card statements.
This process can help you identify:
Missing or duplicated transactions
Incorrect transaction amounts
Bank fees you forgot to record
Payments recorded in the wrong account
Unrecognized or potentially fraudulent charges
Completing your reconciliations each month makes your financial reports more reliable and reduces the amount of cleanup needed later.
4. Review Your Profit and Loss Report
Your profit and loss report summarizes your revenue, expenses, and profit over a specific period.
Review the report and consider:
Has your revenue increased or decreased?
Which expenses have grown?
Which services or products generate the most income?
Are you charging enough to cover your costs?
Is there an expense you can reduce or eliminate?
Your bank balance only shows the cash available today. Your profit and loss report provides a clearer view of how your business is actually performing.
5. Organize Your Financial Documents
Gather the records you may need for bookkeeping and tax preparation, including:
Bank and credit card statements
Receipts
Customer invoices
Vendor bills
Contractor payment records
Loan documents
Equipment and asset purchase information
Business mileage records
Store these documents in clearly labeled digital folders so they are easier to find when you or your tax professional needs them.
Don’t Wait Until December
You do not need to complete every year-end task at once. Set aside a little time each week during the fourth quarter to review one area of your finances.
Consistent bookkeeping can help you understand where your business stands, prepare for upcoming obligations, and enter the new year with greater confidence.
Ready to get your records organized? Download the free Small-Business Bookkeeping Checklist and use it to create a more consistent financial routine.
At Moikeish Business Solutions, I help small-business owners organize their books and manage essential back-office tasks so they can focus on operating and growing their businesses.
Need help putting these steps into practice? Explore our bookkeeping support services.
For your next year-end review, read 5 Things to Clean Up in Your Books Before Tax Season. To better understand your reports, see why your bank balance doesn’t tell the whole story.
