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When the year comes to an end, things can become a bit complex. Updating your books of accounts, getting ready for filing your taxes, planning for the next financial year and other work related to your business are some of the things that may turn up at the end of the year. As a result, there is every possibility that you might miss out on certain things. Therefore, it is important that you prepare an accounting checklist for the end of the year. This end of the year checklist will make sure that you have completed all the required work for the current financial year and are well prepared for the next financial year. Here are some of the things that you need to have in your accounting checklist for the end of the year.
Check Your Cash Flows
Small businesses usually operate in small volumes and hence, they may face the problem of insufficient cash. As a business owner, you do not want your business activities to stop at the start of the next year due to insufficient cash. Therefore, you need to make sure that you have sufficient cash with you for the upcoming financial year. Moreover, when you check your cash flow statements, you will be able to figure out from where the money is flowing in and going out. Thus, this will give you some idea on where you can cut down on certain costs and ensure that there is a better earning in the next financial year than the current year.
Analyze the Financial Statement
Your finances should be kept in order. Therefore, it is critical to analyze the financial statement before the year ends. The financial statement gives you a clear indication of the financial position of your business. Moreover, you can ask your accountant to prepare the financial ratios that give a better idea than the financial statements on which business areas needs improvement.
For example, if the inventory turnover ratio is low, then it indicates that you have a surplus stock and more money is blocked in the stock. Either you need to increase your sales or reduce the amount of inventory. A low inventory turnover ratio also results in an increase in cost to keep the inventories in good condition.
Check Your Accounts Receivable and Payable
Make sure that you have received the payments due from your debtors for the current year. Similarly, clear your outstanding accounts payable to your creditors. Go through all your invoices and bills that are yet to be paid. If there is anything that needs to be paid, ensure that you pay and start the next year without any outstanding expenses. In the same way, try to get the money that was due for the current year from your debtors instead of delaying it any further.
Go Through Your Customer Report
It is important to go through your customer report before you go forward in the next year. See to it that you have updated all the information in your file. It will help you to know which customer was lost and more importantly why he was lost. This will help you to avoid the mistakes you did in the current year.
Once you have completed the entire accounting checklist for the end of the year, you can start the next year fresh. The end of the year checklist can be used for future planning to set new goals for your business. In fact, a professional accountant in Edmonton would also consult and guide you in preparing a suitable course of action for your business. So, before you enter the new financial year, ensure you follow the above-mentioned points to prepare your year-end checklist.