Preparing for Year-End
As the holidays approach and the year winds down, it’s the perfect time to shift your focus to year-end bookkeeping tasks. Taking care of these items now will ensure a smoother transition into the new year and set you up for success during tax season.
Here are the critical areas we recommend reviewing this December:
1. Focus on 1099 Vendors and W-9s
Preparing for 1099 filing is one of the most important year-end tasks.
Review Your Vendors: Go through your list of vendors and independent contractors - are there any new vendors you paid $600 or more during the year for services?
Request W-9 Forms: You need an accurate W-9 form on file for every 1099-reportable vendor. If you haven't received one yet, reach out as soon as you can!
2. Clean Up Accounts Payable (A/P) and Accounts Receivable (A/R)
Tidying up your outstanding balances helps ensure your financial statements accurately reflect your business's health.
Accounts Receivable (A/R): Review your aging report. Are there old, unpaid invoices that are highly unlikely to ever be collected? This is the time to consider writing off these bad debts. Writing them off reduces your income for tax purposes and makes your books more accurate.
Accounts Payable (A/P): Check your outstanding bills. Are there old, small credit balances that need to be resolved or bills that were recorded but never actually paid? Clear out any duplicate or irrelevant items.
3. Finalize Year-End Purchases and Distributions
If you are planning to make certain financial moves, the clock is ticking!
Asset Purchases: Planning to purchase new equipment, machinery, or furniture that you want to depreciate or expense in the current tax year? Make sure these assets are purchased and placed in service before December 31st.
Owner/Partner Distributions: If your business structure allows for owner distributions, ensure all necessary final distributions are made before the end of the year, especially if you have tax-planning goals related to these transfers.
4. Review Your Asset List
Your Balance Sheet should reflect the assets your business currently owns.
Disposed or Sold Assets: Look at your fixed asset list. Have you sold, thrown away, or otherwise disposed of any equipment or furniture this year? If so, we need to ensure these assets are removed from your books to stop depreciation and correctly calculate any gain or loss on disposal.
Taking these proactive steps now will save you a tremendous amount of stress in January and February.
Our team at Hall Bookkeeping is here to help with year-end! Reach out to our team if you have any questions about vendor reporting, write-offs, or fixed asset cleanup.
