The end of the year is quickly approaching.  Now is the time to prepare your small business for the transition from 2023 to 2024.  However, the average small business owner is busy to the point that the end of the year transition is overlooked or possibly even goes unnoticed.

Fret not, as we’ve identified the most important steps for small business owners and managers to take before the start of January ’24.  This is your guide to starting fresh in 2024 without worrying about bureaucratic, tax and other requirements bogging you down.

Analyze the Inventory

The end of the year is the perfect opportunity to assess inventory.  Count your current inventory, and you’ll find generating an accurate and timely profit and loss statement and balance sheet is that much easier.  If you have excess inventory, develop a strategy to reduce it without destroying your margins.

Inventory counts are also important, as available stock impacts the cost of goods sold.  Add in the fact that you might find your inventory count is lower than assumed, and there is even more reason to assess your available stock before turning the page to 2023.

Pay Attention to the Balance Sheet

The transition from 2022 to 2023 is the ideal time to reconcile your small business’s balance sheet.  Reconcile the balance sheet accounts to statements.  If there were any significant purchases, review them to guarantee they are accurately recorded and reflected as such on the balance sheet.

Some balance sheet items will depreciate as time progresses.  Other items will amortize, meaning there will be opportunities to deduct items at tax time.

Fulfill Tax Obligations

Now that the year is coming to a close, your small business accountant will likely require all relevant paperwork to be submitted.  Tax accountants typically request 1099, W2, W3 and 1096 copies.  W2s are to be transmitted to employees.  W2s must also be filed with the IRS by the final day of the year.  Furthermore, the IRS filing also requires the submission of the W-3.

Don’t forget about 1099 earnings forms for independent contractors who contributed to the business throughout the year.  If you paid $600 or more to an employee during the year and that person is not incorporated, a 1099 must be sent.  Even attorneys and rental agencies might be in line for the 1099.  Such forms, including the 1096 must also be filed with the IRS prior to the transition to the new year.

Prior to transmitting the W2s, double-check to guarantee accounts tied to payroll are properly reconciled to reporting.  Reconcile payroll, medical and 401K accounts.  Such preparation will likely spur some questions or concerns.  Our number-crunchers are here to help you prepare all documents and forms for year-end filing.

A/R and A/P

A/R and A/P stand for accounts receivable and accounts payable, respectively.  The end of the year is the optimal time to analyze both groups of accounts, ensuring they reflect the reality of the business’s financial standing.  All accounts payable should include incurred bills yet not bills that have been paid.

Pay close attention to anticipated bills that will be sent to the office by vendors and other parties during the transition between years.  Such bills should be accrued to guarantee they properly align with the financials for the end of the year.

Review the accounts receivable reports to guarantee customers’ unpaid invoices are noted.  Don’t forget to include services rendered in recent days or weeks that have not been invoiced.

Bookkeeping & CFO Solutions 5280 is on Your Side

Our bookkeeping and financial professionals are a call away.  Our team will expedite your year-end tax filing by preparing your books and addressing all financial loose ends before transitioning to the new beginning, that is 2024.

Reach out to our office to schedule a consultation that smooths your transition to 2024 and beyond. You can contact us at 720-608-6240 or by email at candice@bks5280.com.