Getting Ready to Close the Books

Getting Ready to Close the Books

Getting Ready to Close the Books

Getting Ready to Close the Books

Getting Ready to Close the Books

Although many bookkeeping tasks are done all year long, there are other functions that are

performed less frequently. While sending invoices, paying bills, recording transactions, filing

receipts, handling payroll and analyzing inventory are carried out on a daily, weekly or monthly

basis, sales and payroll tax reports and estimated tax payments are only prepared and sent at

the end of the quarter. In addition, there are several bookkeeping responsibilities that are

reserved for the end of the year.  With the month of November almost half over, now is a good

time to take a closer look at what these annual bookkeeping tasks entail.

 Accounts Receivable

As the year comes to a close, bookkeepers must examine and evaluate past due

receivables. Once these accounts are identified, a decision must be made as to which of

several possible actions to take. The choices are to continue to attempt collection from

the responsible party, turn the account over to a collection agency or write the

outstanding balance off as a loss.

 Inventory

Inventory review is an important part of closing the books for any business. Since

inventory is an asset, it figures into any calculation of profitability and loss for the year.

In addition, an accurate inventory is an important precursor to tax preparation. This

includes determining the value of inventory items that have not been sold and

identifying those that are unsellable. Such items amount to an inventory mark-down

which can be claimed as a loss on the business tax return. Not claiming such a loss

automatically means that the inventory will be overstated and taxes will be paid in

excess of what would otherwise be owed.

 Financial Reports

The end of the year is the time when company bookkeeping data is used to prepare

financial statements that give an accurate picture of the company’s financial condition.

These reports, which include Income Statements, Cash Flow Statements, Statements of

Financial Position and Equity Statements, are important because they give business

owners the information they need to make critical decisions about asset allocation,

taxes and business operations. In addition, they contain pertinent information to be

considered by potential lenders and investors and are a necessary antecedent to the

preparation of business tax returns.

 Tax Forms

Although W-2 and 1099’s are not due until after the first of the year, bookkeepers must

make sure records are in order to generate these required tax forms once the New Year

rolls around. The deadline for filing W-2s with the IRS and mailing copies to employees is

January 31st while that for filing 1099s for independent contractors is February 28th.

Although bookkeeping is a key business function all year long, it is especially critical at the close

of the year. Carefully performing the year-end bookkeeping functions described above ensures

accurate financial reporting, maximum tax savings and more effective business planning. Now is

the time to get your business ready for 2016!

If your business is seeking an outsourced bookkeeping solution, the experienced professionals

at Orange County Bookkeeping can provide you with the expertise you are looking for. Our

licensed accountants and bookkeepers are equipped to serve Orange County businesses of any

size, structure or industry focus. Visit us today at to learn more

about our full range of bookkeeping, tax and business consulting services. Contact us by phone

at (949) 242-9852 at or by email at  to receive a free, no obligation


Leave a Reply