As we reach the end of the calendar year, small business owners who started their journey in 2020 may begin to fret over how to do their bookkeeping if they have not enlisted the aid of a bookkeeper Manchester.

Okay, first thing; don’t panic. We’ve all been there and we know it’s a time of confusion and stress that you don’t need. It’s been enough already having to set up from scratch and get established.

No doubt when you started out you adopted a computerised accounting software to help you along, and this is where we will start on closing your books for the year.

First Steps

From your accounting software (be it Xero, Quickbooks, Clearbooks etc.), print a summary of your account information.

Each software may have differing ways to do that so be sure to look it up. What this does is provide you with a printout that helps you should you make any errors whilst closing the books which is probably one of your biggest hesitations at this point. Having this printout will provide you with the ability to backtrack and fix whatever problems and mistakes made. There you go, you already have conquered your first fear and found the solution.

We all make mistakes so don’t worry. If you are using Quickbooks then it can provide you with a complete Year-End Guide Checklist which fully details everything you have to do, so be sure to check that out for a full breakdown. It comes complete with help screen links also so even if you are confused initially it provides enough of a soft help guide to get you through. Check marks can also be saved with each task to give you a track record of completion as you go.

Once completing all the year end tasks, the software can condense and back up the accounting data for the close of the year.

Customer Accounts

If you don’t have professional bookkeeping or Accounting New York City services doing the work for you, then you have to review your customer accounts yourself.

Now unless it is the end of the year, the Accounts Receivable account stays open. That way when you start a new accounting cycle you will want to carry the remaining unpaid balance from any customers over. You can also review customer accounts for any potential bad-debt expenses before closing at the end of the accounting cycle. It’s a good idea as you can use bad debt to reduce your tax bite, believing that the customer is not in the overall likelihood of making good on the debt on the past due account, and simply write off the loss.

Assess those Vendor Accounts 

Okay, by now you may be starting to feel that this is never ending, but you are close to the end and you’ve done great so far.

The end of any accounting period is the prime time to review these accounts to be sure that they are paid in full and prepared for the new cycle. You should make sure to enter any bills towards business activity for the period that is being closed. If not those expenses will not show up in the appropriate year end financial statements.

Be sure to review all outstanding purchase orders to ascertain that there are no missing orders that have been completed but are still awaiting billing via the vendor. So if you received inventory around the end of December and the vendor isn’t billing until January, you should record the bill for December and reflect that receipt during that tax year.

Time to Delete

Okay you are on the home stretch. Hopefully it was not too painful.

The closing process is the best time to assess all open accounts and verify if they are still required. If you have accounts with zero transactions in them you can just delete it anytime, however you should wait until the end of the year to delete those that you don’t feel you’ll be needing in the new year. If you are assessing the accounts during the end of the accounting period that isn’t a year end, just make a list of these accounts and delete them at the year end.

Be weary though, because if you are using an accounting software package you can delete all past transactions also when deleting an account. So if deleting an account at year end, be sure to mark it as inactive so as not to lose that important information.

Now you should be set to go!

This is a collaborative post.