It is hard to believe but the year is finally coming to a close! Though 2022 had its share of drama, it was a pivotal year, serving as a transition out of the pandemic toward a brighter future. We now look forward to a fresh start in 2023. The start of the new year is also symbolic of our patriotic duty to pay taxes in the spring.

If you are like most small business owners, managers and everyday people, you have delayed your bookkeeping possibly for both your small business or personal finances. Here’s a quick review of everything that should be at the forefront of your mind as you transition to tax season.

Don’t Forget Your Tax Forms

Like most small business owners you will have both 1099s for independent contractors and W-2s for employees. 1099s apply to anyone you paid more than $600 in the calendar year and who is not an “Inc.” This includes rental agencies and lawyers. These forms need to be sent to all contractors and filed, along with form 1096, with the IRS by January 31.

Same goes for W2’s. These forms need to be sent to all employees and filed with the IRS by January 31. When filing with the IRS you will file the W-3 as well.

Your tax accountant will ask for copies of all 1099’s, the 1096, W2’s and the W3.

Don’t Overlook Your Balance Sheet

Balance sheet reconciliations should be at the forefront of your mind as you get ready to close your books for the calendar year. All accounts on your balance sheet should be reconciled to the statements. Review large purchases to ensure they are properly booked to capital purchases on the balance sheet.

Many items on the balance sheet will be amortized or depreciated overtime which will become a deduction on your taxes. Unless your balance sheet is fully reconciled and accurate your Profit and Loss will not be accurate.

Payroll Reconciliations

Before you send out your W2 forms, ensure all accounts related to payroll have been reconciled to all payroll reporting. This includes the payroll accounts on both the balance sheet and profit and loss statement. This includes reconciling all 401k, medical and payroll tax accounts.

Our expert small business bookkeeping and fractional CFO professionals are here to help if you find yourself confused or lost.

Year-end Inventory

Properly accounting for inventory is vital to both your balance sheet and profit and loss statement. Inventory numbers directly affect your cost of goods sold numbers as well. Throughout the year, but most especially at year end, you will want to take a physical count of what inventory you have on hand.

Accounts Receivable and Payable

At year end you will want to carefully review both your accounts receivable and accounts payable report. Accounts payable should accurately reflect any bills you have incurred but not yet paid. At year end this could mean bills you have not yet received from vendors but know are coming. You will want to “accrue” or enter these bills so they are properly accounted for on your year end financials.

You will want to do the same with accounts receivable. Carefully review your accounts receivable reporting to ensure all invoices customers owe but have not yet paid are accounted for. This would include services your company has provided but not yet invoiced.

Bookkeeping & CFO Solutions 5280 is here to help you ensure your books are ready for year end tax filing. We are the small business experts. Call us today for a review business consultation. 720-608-6240 or