Business Year-End Wrap-Up and Goals for 2016, Part One

A shoebox stuffed with receipts. Missing documents. Tax deadline panic.

Are you a tax preparer's worst nightmare?

Here is an important list of things to remember (including tips and tricks) as you wrap up this year's business and close the books on 2015. Whether your year closes mid-year instead of following a calendar year, these are still good tips to have in your Accounting Tool Box.

To Do Checklist 

1. Inventory  — Whether you count just a few SKUs or many, every business should perform a physical inventory count. It is better to make final inventory adjustment counts in the current year vs. the new year. Save yourself the headache — and the nightmare of explaining discrepancies to the Executive Team — and get this one done.
    
2. Purchases Clearing — In case you were not sure of the function of this account, it is purely to reconcile items received on purchase orders vs. items invoiced on purchase orders. The balance should always tie to open purchase orders and only against any partially invoiced purchase orders. If the balance does not tie to that, then a write-off is coming.
    
3. Accounts Receivable — This is the best and also last time to really evaluate your 120-plus accounts and really, really confirm whether you think you are going to get paid or not. This is the time when the “rose-colored” glasses come off, and you "bite the bullet" and write-off the accounts that just are not going to become cash in your bank account. NOW, if you have been setting up a Bad Debt Reserve monthly (as is the best practice I can recommend!) for the possibility of this write-off at the end of the year, the hit will not even hurt a bit. But if a reserve was NOT in place, (1) get one in place for the new year, and (2) kiss that money good-bye for this year.
    
4. Balance Sheet — You MUST have all of these accounts, (Assets, Liabilities and Equity) reconciled by end of year. You need a clean set of books entering into each new year — AND — you must know what is in each account. In other words, when an auditor visits, for example, you can provide the back-up support for each item that makes up the balances in your Balance Sheet.
    
5. Prepaids & Notes Payables — Make sure that the balances remaining truly reflect the terms of those accounts.
    
6. Accruals — This is another time to evaluate accruals that may have been in place for the entire year, part of the year, etc., and could be for any reason — lawsuit, tax payments, or any type of future event that will have an effect in another year, but the instance itself occurred in this year. Make sure those accruals are "spot on." Review them again in case any changes or updates have occurred since the accrual was put in place.

This concludes my business wrap-up portion of how to close your books for the year. Hopefully, all of this is already in place in your organization, and this is just a nice reminder for your year-end To Do List.

Now let's talk about Business Goals for 2016 in Part Two. 

Photo credit: ben_osteen on Flickr, box of receipts