It's that time again

Did the last quarter of the year go by before you knew it?  That is when you should have been reviewing your records in preparation for the year-end. Once Halloween hits it seems like Thanksgiving is on us before we can catch a breath. Employees want to take time off for family functions, vacations, shopping, etc. Productivity is not at its peak. Before you can blink, it’s Christmas and the END OF THE YEAR!

Even if it is January already, you should review and reconcile your company records. Certainly this should happen before you send your information to your CPA to prepare your taxes.   Review both your Balance Sheet and your Income Statement for errors.

The Balance Sheet is an accounting of the company’s financial history.  It includes accounts such as bank accounts, accounts receivable, fixed assets, inventory, accounts payable, payroll tax liabilities, notes payable, and equity accounts.  The Profit and Loss Statement is an accounting of income and expenses for a specific period, i.e. this month, last month, this year, last year.

All the accounts on the Balance Sheet should be reviewed. Your list should include:

• Bank accounts are reconciled and correct
• Accounts receivable ledger is correct
• Fixed asset list is current
• If applicable, do a physical inventory at the end of the year
• Accounts payable ledger is correct
• Payroll tax liabilities are current and correct
• If applicable, sales tax payable balance is correct
• Notes payable balances are correct

Review the Profit and Loss statement:

• Income is properly classified
• Expenses are properly classified
• Prepaid expenses handled correctly

You are the person who knows your business best.  Do what I call the “smell test.”  Does anything seem out of line or out of place?  It is much easier and much less costly to correct mistakes now than to file amended tax returns later.