As the year draws to a close, we start looking toward the new year with anticipation. But before you go calling in 2022, let's get this year wrapped!
For many businesses, December 31 also marks the end of their fiscal year, leading to a mad scramble to get everything done at work, and try to navigate the holidays with family.
And even if it's not your year end, ticking off a few items on the list below will help you get prepared for 2022.
1. Reconcile bank and credit card accounts
It's time to verify your accounting records to an outside source - your bank and credit card statements.
Use the Reconcile function in QuickBooks to ensure your balances match the totals reported on your statements. Don't forget to include bank charges such as interest and account fees.
Additionally, review any old uncleared transactions, such as cheques over 6 months old, which would now be considered stale-dated.
2. Review accounts payable
Now is the time to take a look at who you owe. If you have the Essentials or Plus QuickBooks Online subscription, you can simply run an Accounts Payable Aging Report. Check this list to see what reports are available to you.
When running through your A/P Aging Report, check for any old outstanding bills. They may be duplicate entries, in which case you will have to void the bill.
It's also a good idea to ask your suppliers to send all of their final invoices for 2021, along with a statement of outstanding balances, so you can be sure you've got everything for the year. You'll want to gather any missing expenses to help with your tax liability.
Be mindful of bill dates if you file GST/HST returns - you'll need to make the necessary adjustments for your ITCs (Input Tax Credit) for your next filing period.
3. Review accounts receivable
On the other side of the coin is your receivables. Pull an aging receivables report to determine who still owes you.
If certain invoices are deemed uncollectable, your accountant may write them off as bad debt. This will help decrease your tax liability next year.
4. Review financial reports
To give yourself an overall view of your business's performance in 2021, pull these three key financial reports: Balance Sheet, Profit and Loss (or Income Statement), and Statement of Cash Flow.
Review each for any numbers that seem unusually low or high - this could simply signal a posting error. We recommend comparing these reports with those of previous years. QuickBooks Online will allow you to do this at the click of a button.
5. Prepare tax documents for the accountant
Your key financial reports mentioned above will be required by your accountant. Be sure to review these reports before sending, and ask your accountant about any numbers that seem unusually high or low.
You can also ask your accountant for a checklist of what else they require for year end - this might include your auto expenses and mileage, home office costs, interest statements and other eligible expenses you can claim on your tax return.
You can also give your accountant access to your QuickBooks Online file so there's no emailing back and forth and paperwork drop-offs.
6. Backup the data
Take some time over the holiday break to step away from your computer and cell phone (even if momentarily). You can use this time to do a backup of both, if you're not already taking advantage of cloud-based storage solutions.
We always recommend backing up your data on a schedule - and backing up the backup! It's better safe than sorry when it comes to your business's data.
7. Do an inventory count
If your business has physical inventory, now is the time to do an inventory count. Consider using an app to assist you.
QuickBooks can also help automate your inventory moving forward. Many integrations also exist between Point-of-Sale (POS) systems and QuickBooks and other accounting softwares. Check the QuickBooks App Store to find integrations between your softwares and systems.
8. Audit and update website & social media
If you've got a sliver of free time this holiday season, go over your website with the eyes of your ideal customer.
Is it user-friendly? Mobile-friendly? Is all of the information up-to-date? Your website is the digital face of your business, so you'll want to take extra care to make sure it accurately represents your brand.
If you haven't got a website, take advantage of holiday promos from top website builders.
Consider creating a plan for your social media as well - 2021 trend data shows the importance of social media for small businesses. Check out the report at GWI here.
9. Double check payroll
Run a payroll summary report for the year. Make sure that your liabilities match up with what was reported on your PD7A remittances. Reconcile any discrepancies.
Repeat for WSIB, if applicable. Any differences could indicate that a paycheque was created after a payment was issued to clear your liabilities.
10. Update contact info
Send out a request to your employees, customers, and suppliers to fill out a provided information form (get a template here)
Make sure that the information received matches what you've got on file. Once it's time to file those T4's and T5018's, this will be important.
Also when following up with customers on those receivables, you'll want to ensure you've got the proper contact and not a dead mailbox.
11. Assemble a mileage log
Do you travel for business? You may be eligible to claim your mileage, but you'll need a proper logbook. An app like Everlance can help you with this moving forward, so you won't ever forget to log those kilometres!
QuickBooks also offers mileage tracking to its users - here's an article on how to set it up.
12. Plan goals for 2022
Finally, sit back and envision your 2022. What kinds of goals do you want your business to achieve? What small actions can you take every day to get there?
Consider also setting aside dates for company events AND your vacation. Make sure you plan a week or two away in 2022 to relax and refresh - you deserve it!