Every calendar or fiscal year, businesses must get their books in order. It can be complicated for many owners, especially those that take care of the bookkeeping themselves. Mistakes are inevitable if you're unfamiliar with accounting basics or how to report taxes.
Here are seven things you can do to help prevent potentially expensive mistakes:
1. Record daily transactions
Get in the habit of recording all transactions frequently, making sure they are recorded at each month end. Missing something might throw off your entire year-end report and you will have to spend an unreasonable amount of time finding the omission.
2. Capture year-end adjustments
Accruals, deferrals, and asset adjustments need to be properly recorded at year-end to ensure that your financial statements are complete, accurate, and comparable to previous fiscal years.
3. Organize your files
The easier and more distinct your information is, the easier it’ll be for you or someone else to find that information.
4. Know your payroll tax obligations
This can be tough, especially when you factor in raises and taxable benefits for multiple employees over the course of the year.
5. Update your software
Most software programs will send updates every time there are changes to tax laws. You might not be compliant if you’re working with an older version of your accounting software.
6. Keep your old records
It’s best to hold onto any old financial results and receipts in the event that you’re ever audited or need to secure financing.
7. Make sure your bookkeeper understands your business
Your bookkeeper should be able to help you find tax-saving opportunities for your specific line of business.
BDO can help.
We work with businesses in different industries to help them sort out their year-end books. Contact our Cloud Bookkeeping Services team to find out how we can help your business.