Another year is going to end soon, whether you accept the fact or not (Also see Reasons for Freelancers to Keep Track of Bookkeeping Records). If you own a small company, you can celebrate the new year with assurance by completing some simple tasks now or you can consider getting assistance from an accounting firm in Johor Bahru.
Balance Your Accounts
Give a satisfactory record of every single deal, which include bank, cash as well as credit cards. Ensure that you obtain all your month-end statements and documents, and your bank reconciliation reports are with you too (preparing these documents every month would be a great habit). You have to be alert to any inconsistencies between your records in your listings and bank statements. You are finding:
– Cheques issued but not paid
– Down payments which are not added to your account yet
– Direct deposits and debits, as well as any other deals that show inconsistency
The cash-basis accounting system is the most popular method used among you (basically, the most vital part is cash received and spent from your bank account). If this is true, you must keep an eye on the prepaid expenditures and earnings. Split these items which are paid beforehand from regular payments and gains as they are going to be a liability or an asset, thus have to be listed in this way on your balance sheet.
You may have obtained bills for specific expenditures that will be settled afterwards and wish to list them down as expenditure for this year. However, this can only be done if an accrual accounting system is used (basically, the key is your debt and liability, not the real cash payment). However, they can be treated as legitimate expenditure under the cash-basis accounting technique if you have decided to pay for the expenses before the year-end comes. Another classic example of the impact of accrual accounting is the depreciation of assets.
Monitor Carrying value of Your Assets
Devaluation is a type of non-cash expenditure you have to record properly. If you are sure that specific financial debts are unrecoverable, treat them as uncollectable bills. Monitor your permanent assets. Whenever you gained lost any assets, you will have to confirm that you have recorded them. If you have the intention of purchasing any new assets later, acquiring them in the present financial year is a better option. You can lower your tax liability in the current year and take advantage of depreciation. Needless to say, these deals are according to current needs as well as the financial condition of your firm (Also see Difference Between Balance Sheet and Profit & Loss Account).
Keep Track of Outstanding Accounts Receivable
Last but not least, remember to settle earnings accumulated for the current year yet not gotten, as well as identify whether it needs to be recorded as open accounts receivable or cancelled as an uncollectable bill (Also see Benefits of Managing Your Accounts Receivable). In this case, the accounting system you are using is the determining factor. As stated before, if accrual-basis is used, it will be listed as your revenue. If cash-basis is used, it will not leave any record because as long as the payment is not received, it is not earnings. Usually, you shall remove it from the books, cancel it as an uncollectable bill and subtract it out to cancel the profits if it is over 90 days.
Print Them Out, Take a Break and Chill Out
Your year-end financial statements can be created as soon as you have settled and keyed in every data about your deals into the accounting system (Also see Factors to Consider Before Selecting a Bookkeeping Service). These statements consist of your profit and loss reports, as well as balance sheets. Keep in mind to analyse the reports carefully to make sure no errors or problems have occurred.
Completing these tasks will not just get you prepared for tax time. At the same time, it will be more convenient for you to draw up a blueprint for the next year. Now, you can sit back and have a calm and enjoyable year-end.