As 2023 comes to an end, we start looking toward the new year with anticipation. But before you go calling in 2024, let's get this year's books wrapped!
Around this time of year, it's not just the holiday season that brings about a busy time for businesses. For many, December 31 signifies the end of their fiscal year, resulting in a frantic rush to wrap up tasks at work while also trying to make the most of family time during the holidays.
Even if your company's fiscal year-end falls at a different time, taking some proactive steps can set you up for success in 2024. Below are a few items that you can check off your list to ensure you're well-prepared for the upcoming year.
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 2023, along with a statement of outstanding balances, so you can be sure you've got everything for the year. Doing so will help reduce your tax liability.
If you file monthly or quarterly GST/HST returns and you’ve received a missing bill from a supplier from a prior period, you'll need to make the necessary adjustments for your ITCs (Input Tax Credit) on 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, you’ll need to make entries for any uncollectable invoices by using Bad Debt expense. Speak with your accountant or bookkeeper about this, as there are a lot of rules and regulations surrounding Bad Debt expense and Allowance for Doubtful Accounts.
4. Review financial reports
To give yourself an overall view of your business's performance in 2023, 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. This is easily done in QuickBooks Online by using the Compare another period function at the top of the reporting screen, and choosing “Previous Year”.
You can choose to compare by the change in dollar value ($) or percentage (%), or both!
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, mortgage 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 software. Check the QuickBooks App Store to find integrations between your software and systems.
8. 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.
9. 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.
10. Assemble a mileage log
Do you travel for business? You may be eligible to claim your mileage, but you'll need a proper logbook - and you’ll be thankful for this in the event of an audit.
Now is the time to set this up so you’ve got a fresh start for 2024. 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.
Once you've completed your year-end tasks, sit back and envision your 2024. What kinds of goals do you want your business to achieve? What small actions can you take every day to get there?
Set aside dates for company events AND schedule your vacation. Make sure you plan a week or two away in 2024 to relax and refresh - you deserve it!
And if your books are taking up too much time or just need a one-time clean-up, contact us today for a free quote on our services!