The end of the calendar year symbolizes a transition from the old to the new, both in terms of personal perspective and business financials.  The first of the year is the start of the new financial quarter, meaning there is a need to tabulate finances from the year-gone-by for tax purposes.

Get your new year started off the right way with a stress-free tax season.  Bookkeeping & CFO Solutions 5280 is here to help you get to a smooth year-end.

Ensure the Balance Sheet is Reconciled

Balance sheet reconciliation constitutes an in-depth analysis of your business’s financial equities, assets and liabilities.  Double-check the numbers to guarantee they are properly aligned for tax filing.  All balance sheet accounts must be reconciled and tied to a statement.

Even one inaccuracy has the potential to misrepresent the business’s finances, lead to post-audit penalties, and improperly influence decision-making in the financial quarters ahead.

Above all, focus on numerical accuracy and transparency.  Though it is tempting to avoid year-end balance sheet reconciliations or shrug off seemingly minor errors, reconciliation is necessary for financial clarity as well as audit prevention.  The reconciliation process ultimately constitutes a form of risk management every business needs.

Bookkeeping & CFO Solutions 5280 are experts in balance sheet and year-end reconciliations.

Review & Reconcile the Profit and Loss Statement

Experienced financial experts recommend creating and reviewing your profit and loss statement on a monthly basis. You will then also want a reconciled year-end profit and loss statement. Commonly referred to as P&L, this statement gauges the business’s sales and expenses across a specific interval of time with a set beginning and end date.

The overarching purpose of the P&L statement is to tally the entirety of revenue sources, then reduce that total by expenses related to the business’s streams of revenue.  The P&L provides an invaluable look at the enterprise’s financial progression across the year coming to a close.

The most insightful and effective P&L statements report revenues and expenses that match one another.  If expenses and revenue are not in accordance, your company might be scrutinized by the IRS.  As an example, the expenses your company absorbs to spur product or service sales must align with the actual sales of the business during the designated period.

Pay close attention to the growth rate of expenses.  If expenses are outpacing revenue, conduct additional analysis to determine the “why” of the matter.  There is a chance that the cost of your company’s goods sold is rapidly rising as a percentage of the business revenue.  Continue your analysis, and you might find expenses are outpacing revenue as a result of inflation or underlying inefficiency.

Reviewing AP and AR and Reconciling Them Every Month

If your business is like most, your Accounts Payable (AP) and Accounts Receivable (AR) have loose ends that need to be tied tight for year-end peace of mind and financial balance.  Take a close look at your AP and AR to highlight unpaid money owed to your business, and also highlight your company’s unpaid bills to merchants and others.

The industry’s best accountants recommend reconciling both AP and AR every single month, without exception.  However, plenty of business owners and managers let AP and AR reconciliation slide, simply because reconciling both is a time-consuming and often frustrating process. This is one of the reasons why accounting should be one of the main tasks you delegate in your business.

There is no shame in admitting the reconciliation of AP and AR accounts is a laborious and complex process better done by our team of professional number crunchers at Bookkeeping & CFO Solutions 5280.  Our accountants will closely analyze your AP and AR, matching unpaid bills with general ledger totals for full financial transparency.

Lean on us beyond tax season, and we’ll continue the reconciliation process on your behalf every month so you have timely and accurate financial statements to manage and grow your business!

Schedule a Consultation With Bookkeeping & CFO Solutions 5280 today at:

Do you own or manage a business?  Our tax preparation team is ready for your end-of-year projects to get you ready for tax filing.  We also provide additional services ranging from digital bookkeeping to forensic accounting and fractional CFO services.

Reach out to us today to schedule an initial consultation.