Closing the fiscal year is an important process for any small business. Having a comprehensive accounting process is essential to ensure a successful year-end close. Preparing a year-end accounting process can help ensure that all necessary steps are completed to wrap up the fiscal year. This will provide a smooth transition into the new fiscal year. CRI Payroll Services’ article provides a simple accounting process for a successful year-end close. This will help ensure that all your accounting needs are covered.
Understand the Year End Deadlines
As the fiscal year draws to a close, it is essential to ensure that you are aware of all important year-end accounting deadlines. Create a closing schedule with target dates for all activities related to your fiscal year-end. This will help you avoid missing any crucial deadlines.
Your closing schedule should include reporting and data processing deadlines and the fiscal year close date. Identifying these critical dates is important to make sure all employees understand what is expected. Employees must understand when they should provide documents such as invoices and receipts.
As this process can take time, it is important to provide ample time for staff to submit these documents to be sure that the year-end accounting process goes smoothly. Anticipate delays.
Review all Transactions & Review Financial Statements
It’s essential to review your financial statements and ensure that your company’s financial health is in check. Reconcile all cash accounts and record adjusting entries. Compare inventory accounts with physical stock (if appropriate), and review prepaid spending. This step is important to ensure that your recorded transactions match evidence from credit card statements, bank statements, invoices, and receipts.
Accounting for every cent is essential for year-end accounting and staying audit-ready.
Close Out Accounts Receivable and Payable
At the end of the fiscal year, it’s important to close out accounts receivable and payable to ensure your year-end accounting is accurate. First, compare amounts received or paid against what has been accrued. You must ensure that all records of money coming in or going out of the business match what occurred.
If there’s a balance outstanding, create adjusting entries to the original journal entries. Reconcile all cash accounts and record adjusting entries. Compare inventory accounts with physical stock (if appropriate), and review prepaid spending. This step determines the value of all assets that your company currently owns.
Any receivables owed at the end of the year should be added as credits on the income statement and debits on the balance sheet. This ensures you start the next fiscal year with the correct financials. Any unpaid debts should be listed as liabilities or accrual expenses on the balance sheet.
Keeping track of all your company debts is crucial to managing your finances effectively. Having a successful year-end accounting period is possible.
Close your books
With our above accounting process for year-end close, you’re off to a great start. And it gets even better with a full-service payroll, bookkeeping, and human resources team to assist you throughout the year. This helps finance teams close faster, save time year-round, and take financial decision-making to the next level. With these features, businesses can finish their year-end accounting quickly and stay ahead of the fiscal year. As your business grows and scales, you’ll be confident that your books are in the best shape possible.
For more tips on optimizing your accounting process for year-end closing, give us a call today!