Avoid the Year-End Crunch with These 5 Tips
The process of gathering information for financial statements and tax return preparation can be intimidating. But there’s no need for fear or dread. By following our five simple tips, you can wave goodbye to year-end stress.
1. Talk to your CPA sooner rather than later.
It’s a good idea to have a conversation with your CPA prior to year-end. You may want to discuss whether or not you need tax planning. You should also inform your CPA of any substantial transactions that have taken place during the year or that are expected to occur before year-end.
2. Start with correct information.
Each year, your CPA should send you a list of adjusting journal entries for your financials. Be sure to record all of these — failing to do so could cause the current year’s numbers to be incorrect. If you have done everything correctly, the net income on your income statement should match the net income on the trial balance provided by your CPA.
3. Clean up your financials
Consider cleaning up old outstanding transactions. Be careful, however, because deleting or voiding transactions from prior periods could prevent your financial statements from correlating with prior financial statements or tax returns, creating more work for the current year. Talk with your CPA to determine how to best clean up these transactions. As a last check, be sure all accounts reconcile to their supporting documentation.
4. Provide year-end information all at once, not in pieces.
While it’s tempting to do otherwise, provide all requested year-end information in one package instead of bit by bit. Besides making it easier for you to keep track of what’s been submitted, this can also help to prevent delays in the completion of your financial statements and tax returns.
5. Questions? Don’t put them on the back burner.
It’s likely you’ll run into various accounting or tax-related questions from time to time. Don’t save them for the end of the year — contact your CPA right away. He or she can help you accurately record transactions and discuss possible financial impacts, leaving you better prepared for year-end.
Doug McDonald, CPA, is AEM’s Professional Services Industry Leader and a seasoned recreational pilot. When he’s not soaring through the skies, he’s helping his clients’ businesses soar to new heights. You can reach Doug at 952.939.3207 or at email@example.com.