Believe it or not: Year-end is here. Five things to do to close out your financials.
Close your books through November. Many business owners are so overwhelmed by the fact that their books are not up to date, they add to the problem by waiting until tax time to close out their year. Anything you can do in advance will save you time, headaches, and (most importantly) emergency rate fees from your accountant! If you have some down time during the holidays, it will be well spent by reconciling and closing your QuickBooks file through November 30. Once you have 11 months of the year done, you’re almost there! You will probably spend less than a day in early January reconciling and closing books on December. Maybe you can even negotiate lower fees with your CPA if you can deliver a clean set of books early in January before all the other clients reach out to them.
Anticipate what 1099/1096 forms you need to send. Yes, almost every business is probably guilty of paying someone by check more than $600 per year and forgetting to ask for that precious W-9 form. The W-9 form tells you if you’re obligated to send a 1099 to the vendor for business during 2017. Many of your vendors are exempt from receiving Form 1099, but the W-9 is your best defense during an IRS Audit. It is your solid proof that you were not obligated to send a 1099 to the vendor and a 1096 to the IRS. Why not cover yourself when possible?
Gear up to send forms to any of your W-2 employees. You know it’s coming and you know it’s due to be post marked to the employee by January 31. Also, keep in mind if you file more than 250 W-2s, you must do so electronically. Why not send them early? Once again, maybe you can negotiate a lower fee with your CPA if you can have your data ready before the rest of the clients. Ask yourself questions about what else should be included on the W-2. Is there any imputed income such as relocation expense or travel you provided for employees to use personally?
Collect on your accounts receivable and pay on your accounts payable. Why would you want to carry receivables into the new year? Not only is this is more cash you can use to run your business, but it’s also a doubtful number to report to the IRS. If a customer is late on paying, when is it appropriate to include this as bad debt instead of a revivable? Maybe you can even take a tax deduction if a client stiffed you on some bad debt. Also, if possible, pay down your payables to have a cleaner year-end closing. If you’re subject to an audit, the auditor will have to test your payables and they will spend less billable hours in this area if they are paid before December 31.
Make sure to pay your quarterly tax payment due January 15. Some small businesses lose track of this important quarterly payment as they’re overwhelmed with other year-end tasks, don’t forget this crucial payment! With all these tips, you're sure to make closing 2017 one for the books. Good luck, enjoy, and call us if you need help.