This is a crazy time of year for everyone. Our daily lives are filled up with decorating, shopping, baking, kids’ holiday concerts and recitals, travel, and more. On top of everything, it’s the busiest time of year for most businesses. It’s a tough ask to add one more thing to your list, but I’d like to suggest you put in a little extra effort to get your bookkeeping under control before the end of the year. I recommend taking three basic steps now to make sure your books are ready to go when you need them to be.
Reconcile Accounts
I am always very good about keeping my business books up to date and reconciled, but I always slack a bit on my personal books. Take the time to go through everything and make sure that all of your accounts are reconciled. Review everything - Checking, Savings, Credit Cards, Loans, and Mortgages. As you are going through your personal files, make sure you look for any business expenses that you may have inadvertently paid for with personal accounts, and make sure those are accounted for in both your personal and business records. Don’t forget to calculate and enter mileage, if it isn’t done on a regular basis.
As you are reconciling, it is also a good time to make sure that you enter the general ledger depreciation and amortization entries that your accountant gave you with your taxes last spring.
Tokstad Tip: I have found that the easiest way to quickly reconcile accounts in Quickbooks is to attach a second monitor to my computer and pull up my Quickbooks file on one screen and my banking records on the other screen. This saves lots of time and trees, if you don’t have to print statements. If you don’t have access to a second monitor, you can pull up your bank statements on an iPad or phone instead.
2. Prep 1009s and W9s
Business owners must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards or other income payments. You don't need to issue 1099s for payment made for personal purposes. You must send out the 1099-MISC forms and the 1096 summary form by January 31st. To make this process easier, it’s a good idea to ask all vendors and subcontractors to complete a W-9 form before you pay them. If you haven’t done that this year, don’t worry, but do track down that information as quickly as you can. You can find a copy of the W9 form on the irs.gov website. I recommend emailing vendors an electronic copy of the form, asking them to fill it out, take a photo, and email the form back to you as quickly as possible. Keep an eye out for a 1099 specific blog post in January, where I will discuss more specifics on how to file your 1099s and 1096.
3. Clean up Your A/R and A/P
The end of the year is a good time to review all outstanding bills and invoices that are due. Make sure you don’t have any customers with aging invoices. If you do, send a gentle reminder that you would like payment before the end of the year. Take care of any outstanding bills so that your vendors don’t have to track you down. This is also a great time to make sure all credits and payments match up. Dig in and research any that look off. It will feel good to start the new year off with clean balances.
Every year, I have high hopes that I will be totally on top of everything and get a perfectly complete Quickbooks file to my accountant the first week of January. Unfortunately, the new year always comes with its own busyness and life complications, and I have often found myself racing to hand over the information at the last possible moment. Why risk getting your file to your accountant too late and having to file an extension? Let’s all promise to get on top of things now to set ourselves - and our accountants - up for an easy tax season.