As we approach the end of 2017 small business owners have much on their plate to close the year strong and plan for a prosperous 2018. I have prepared a year end checklist to assist in closing accounting records and organizing your data for an easier tax and reporting season ahead.
- Obtain completed and signed W-9 forms now for all service providers to assist in completing your 1099 and 1096 filings in January. By ensuring that you have all necessary information from your unincorporated service vendors your annual reporting will be very easy come next year.
- Establish a company capitalization policy. This allows easy determination when recording purchases as to whether they should be expensed or capitalized.
- Perform an inventory of all fixed assets listed on your balance sheet. Remove any disposed items and ensure that all equipment and furniture purchases during the year are recorded properly. This not only assists with your income tax preparation, but ensures that you are not paying personal property taxes on any items you no longer have.
- Bank and credit card accounts should be reconciled and up to date if not already. This is important to ensure that all transactions are recorded for expense deductions.
- As an owner or shareholder, you may have purchased items for the business with personal funds or credit card. Make sure these are all captured by year end as a loan reimbursable to you from the business or as a capital contribution. This is important in recording all expenses for the business and for your reimbursement or capital account tracking.
- Perform year end tax planning with your accountant or CFO to reduce any potential net income and income taxes. If you have net income projected, consider purchasing equipment or other items slated for next year in 2017. Another solution is to issue a bonus to yourself or your employees.
- Record any adjusting journal entries in your accounting records provided to you by your income tax preparer when your taxes were completed earlier this year. This will save time by your tax preparer during next tax season and could potentially reduce the cost of preparing your tax returns. Significant time can be spent by your tax preparer to reconcile your 2016 accounting records to theirs.
- Provide your information to your tax preparer as soon as possible. You may receive a discount for early submission of documents and your tax preparer will be very appreciative of your not waiting until the final days of tax season. Additionally, some tax preparers will charge an additional fee for late receipt of documents or require that you file an extension.
I hope that these tips will assist you in having an easy close of your 2017 accounting records and a fresh start for the new year. If we can be of any assistance with any of the items listed on the checklist, please let us know.