The good news is that the world didn’t end on 12/21 as the Mayans had predicted. The bad news is: you still need to work on your accounting and taxes for 2012. Here are some tips in the form of a checklist so you can avoid overpaying or underpaying the taxman. It’s important you do this before you close your books for 2012. Happy 2013!
Reconcile your bank accounts
If you have been manually entering the bank transactions, it is imperative that you reconcile the bank balances with the actual bank statements. Look for the usual culprits like cancelled or uncleared checks. Give this a skip if you have setup a feed for online banking and have forgotten how to enter the bank transactions.
Complete your invoicing
Send the invoices for all the services you have rendered; products that you have sold and for any task that remains unbilled.
Record all your supplier bills
Ensure that you haven’t missed entering any supplier bills. Filter your inbox for e-mails from your suppliers — pull out that shoe box and if you see any bills that you have missed entering in your accounting system, do it right away.
Write off bad debts
The world isn’t a nice place always and you might have customers who are unlikely to pay you their dues. Let’s hope there aren’t invoices that you would be writing off. However, if that were to happen, then write off the invoices sent to such customers.
Get to the bottom and look for outliers
Compare the reports of the current financial year with the previous year’s and see if everything’s kosher. If something looks unreasonable, don’t fret! Use a magnifying glass and get ready for the great reporting drill-down. Dig and Drill until you are convinced till the last penny. Even pennies matter in business!
Record your depreciation
If your business has any fixed assets, you have to account for depreciation expenses. Zoho Books doesn’t have a form for this, but manual journals will come in handy. Consult your accountant, if this applies to your business.
Handle prepaid expenses
If your business has paid in advance for the insurance or other services, you would have recorded that as ‘assets’. You will have to categorize these as ‘expenses’.
Close out the owner’s draw
Any money you have withdrawn from your business for personal expenses is typically recorded under a temporary account. You have to close this account and transfer the balance to an equity account that reflects your stake in the business.
Get started with 1099s now
If you are using sub-contractors, you have to send them 1099 by Thursday, January 31 2013. Identify your 1099-MISC vendors, cull out the relevant details and use the services of an online 1099 filing service to send the forms across.
Don’t miss the last (s)mile:
If you spend time on the road for your clients, don’t miss recording the mileage. You can claim deductions for that!
I hope this checklist will come in handy for your year end and beyond. In addition to this list, invite your accountant to your Zoho Books organization and allow him/her to review your numbers from the comfort of his office or home. If you have been using an accounting software now and have done your books manually before, you must have realized much of the rigmarole associated with the manual accounting, like transferring of balances from income and expense accounts to retained earnings (sorry if this sounds like the ‘Accountantspeak!’) has completely gone. If you are still doing your books manually, the best gift you can get yourself this new year would be an online accounting software that you can count on!
Have an amazing 2013!