This has been an unusual year with COVID-19 and the financial burden many businesses are facing. What has not changed is the calendar. The year ends on December 31st, and accountants will want to start preparing taxes between now and then.
What needs to be done now?
If you haven’t already, reconcile your bank, credit card, and loan accounts for each month. Equally important after reconciling is investigating and removing unreconciled items. For example, checks over 60 days old should be reviewed to determine why they have not cleared the bank. Not doing this important step will provide inaccurate financial statements.
A Gentle Nudge
Look at your receivables and send clients a gentle reminder that their account is past due. Perhaps, try to settle long standing accounts receivable by offering a discount. Alternatively, if you have uncollectable debt, now is a good time to write it off as bad debt. Start the year fresh.
Get Your Invoices Out
Look at your unbilled time or unfinished projects. Set an internal deadline to get them completed and invoiced. The sooner you do this, the likelier you are to get money in before year end.
Look at 1099 Vendors
Ensure that all necessary information is up to date for 1099 vendors. You will need their taxpayer ID and the correct address at the very least. Waiting until January to track this information down is never a good plan.
To the extent you can, pay your vendors. Reducing your payables will increase your taxable deductions and leave you with cleaner accounts in January (not to mention very happy vendors).
Now is a good time to run your internal financial reports and check for errors and omissions.
Now that the hard part is complete, all you have to do is keep it up! It takes less time to be organized than disorganized. Find out how we can help you catch up your books in anticipation of year end at www.budgetease.biz.