Get a Jump Start on Year-End Activities

There’s lots that needs to be done at the end of the year to get your books ready for taxes. Some of you have been practicing good bookkeeping all year long so this list is not so long.  Here’s a list of what you can do this month to make January easier on you.

  • Adjustments to Make to Your Books while some adjustments are best left for your accountant, there are a few that you can do or at least get the information pulled together for your accountant.
    • Bonuses – It’s great to give bonuses to employees at year-end, but it’s not so great to forget about the tax part of it. Bonus checks should always be run through payroll, but often are not, which requires an adjustment after the fact.
    • Retirement Plan Contributions – If cash is available at year-end, it’s a great idea to maximize the allowable deductions for the retirement plan you qualify for. Check with your accountant  and financial planner for more specifics.
    • Withholding – If you are both the owner and an employee of your company and have not made enough tax payments throughout the year to account for all that money you’ve earned in 2012, you can adjust your last few paychecks to withhold the amount you need.  Sometimes, this also reduces or eliminates the penalty for underpayment of estimated taxes.
    • Work in Process – for those of you who have projects that span over a few months and need to track work in process there are usually two methods – one simply for year-end for tax purposes and the other method is done monthly; typically only my larger commercial clients track monthly. If you would like help what reports derived how to pull some of that information together, I will be happy to help you.
  • RECONCILE !!  I can’t tell you how big this step is.  This is a good step to verify that you have tracked all money into and out of the company and will help you find missed entries, duplicates, checks not cashed, and more.  You will save money with your accountant if they don’t have to reconcile.   And DON’T just go into the register and check all transactions. I promise that using the reconcile feature inside a QuickBooks will not only be faster but more accurate. Accounts to reconcile would include
    •  Bank and credit card(s)
    • Loan accounts
    • Other balance sheet accounts, such as employee advances, prepaid insurance, customer deposits, etc.
  • List of loans and terms – Make a list of any new loans, lines of credits, etc. that you took out this year.  Your accountant may want to see a copy of the terms and interest rate.
  • List of equipment purchased  – Your accountant will want to know of any equipment, vehicles, furniture etc. that you purchased during the year.  If the purchase is large enough, rather than expense the purchase in full, your accountant will depreciate the purchase over a few years. Ask your accountant what size purchase – frequently it’s been purchases of 500 or 1000, but with recent tax law changes (some temporary), their answer may be different.  Usually your accountant will want a copy of the receipt or purchase document with the price.  In the case of a vehicle where you had a trade-in value and/or down payment, then they would want that information as well.
  • Employees
    • Unemployment – unemployment rates frequently change each year in part based on how many employees in any claim with your company. And given the high rate of unemployment these last few years, unemployment coffers have run low so the rates may have gone up even if you have not laid off an employee unfortunately. The state of Maryland usually you sends a letter in November with the number to call to see what your new rate will be. If you process payroll yourself in QuickBooks, look to see if your version will let you enter the new rates for the upcoming year – new versions do. If you need help entering the new rates, call us for help.
    • Employee withholding – it’s good to check whether employees’ withholding will be the same or if they want to revise it, so have them do a new Federal W-4 and state withholding forms (sometimes they decide after their taxes are done!)
  • 1099 Vendors – This is a good time of year to work on the list of vendors that are 1099 eligible. To get your list,
    • Click on Vendors, Print 1099’s
    • Review list of who is eligible for 1099
      • Check with your accountant as to which business structures require a 1099, but generally sole proprietors, partnerships and LLC’s for starters.
      • If you paid them $600 or more, they will need a 1099
      • Starting with last year if you paid by credit card, debit card, or third party vendor such as PayPal,  those amounts are NOT to be included in the 1099’s you issue.  To make sure that your 1099 does not include credit card and PayPal payments, you can review the articles we wrote last year for the steps.
      • 2012
      • 2011 and older
    • Confirm that contact information is correct,  ask for tax ID or have them send a W-9
  • QuickBooks Version – Intuit supports 3 years, so in May they will “sundown” QuickBooks 2010.  Doesn’t mean 2010 won’t work, but if you use payroll or email reports, invoices, or statements, 2010 will no longer work.  The October newsletter had highlights of the new features  for Pro and Premier and November discussed the new features in Enterprise; we can provide demos if you want.  And if you want to compare desktop QuickBooks with online options, let us know as there are different considerations.  If you would like to upgrade, let us know – we can help you get a good price and assist with the upgrade if you need.
  • Other Services – Calendar or fiscal year-end can be a good time to review other services – whether you need them and or change them.
    • Merchant Services – If you accept credit cards, merchant services is worth reviewing.  Rates can be negotiated – usually based on your volume of business (or how badly they want you as a customer!). If you have not looked at the Intuit Merchant Services, I encourage you to do so.  I can promise that Intuit is NOT going to give away their integration with QuickBooks to another provider.  With no double-entry, the ease of reconciliation and the time saved, it’s often a smart decision.  We are usually able to help get fees waived or reduced so check with us first to be sure you get a good deal.
    • Payroll – This is a great time of year to review your payroll options.  We’ll be happy to explain the Intuit options and should you choose to use them and/or make a change, we can get you discounted rates, and/or fees waived usually. So check with us first. We have also written a couple articles to help you through the thought process.  Don’t just look at tangible costs. Also consider job/project costing (if that’s an issue), amount of time to handle payroll takes,  risk (of under payments or missed payments) or fraud (I’ve known of bookkeepers and even a payroll company)

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