As the calendar flips its last page and the year comes to a close, it’s time for farms and food businesses to reflect on their financial journey. Effective bookkeeping is not just about recording transactions; it’s about strategizing for the future and ensuring that your finances are in order. To help guide your year-end bookkeeping, here’s a checklist we recommend completing before the new year begins:
1. Year-End Tax Planning: Meeting with Your Tax Accountant
Schedule a meeting with your tax accountant before the end of the year. Topics to discuss might include equipment investments, retirement plan contributions, and the preparation of 1099 forms. If you’re working with a tax consultant, ensure you provide them with the necessary information to streamline the process; these conversations will be most effective if you’re ready with up-to-date financials.
2. Payroll: Buttoning Up for a New Year
If you’re considering switching payroll platforms, start the setup process asap. It’s easiest to run your first payroll of the year in the new platform to avoid the headache of having to report historical information. Setting up now also allows ample time to address any unforeseen issues and ensures a seamless transition into the new year. Verify that your payroll system is equipped to handle essential forms like Form 941/943, Form 940, W-2s, and any other required payroll forms.
3. Accounts Receivable and Accounts Payable Cleanup
Conduct a thorough review of your Accounts Receivable (A/R) and Accounts Payable (A/P). Write off old balances and ensure that outstanding invoices are appropriately addressed. If you’re looking to deduct A/P expenses for cash-basis tax purposes, make sure to pay these balances before December 31st.
4. Capital Purchases: Summarizing and Communicating
Be prepared to find and summarize major capital purchases, and provide detailed information for purchases exceeding $2,500 to your tax preparer. Establish a plan with your bookkeeper to follow up after the tax return is completed to ensure that asset purchases are accurately reflected on the balance sheet.
5. Equity/Owner Draw Accounts: A Thorough Review
Conduct a detailed review of equity and owner draw accounts. Look for any unusual or irregular transactions that may need clarification. Also, scan the Profit and Loss (P&L) statement for possible personal transactions that should be moved to owner draws. Clarify whether any business expenses were paid from personal funds.
6. Budgeting: Engaging in Strategic Discussions
If you are a current KTC bookkeeping client, you should connect with your bookkeeper now to discuss any potential add-on projects for the new year. Not a current client? Learn more about our bookkeeping services here!
By following this comprehensive checklist and consulting with your financial experts, you position yourself for a well-organized financial future. Here’s to a successful year-end and a profitable new year!