Year-end is a time for reflection. It is the time to look back and redefine your companies vision and goals. But let’s be honest, this is a little difficult to do if your accounts are not in order. Keeping this in mind, we at OHI have compiled a simple year-end accounting checklist for your business.
Fill up Your Forms and Make Sure Your Employees Do Too (w2, w9 & 1099s)
As an employer there are a number of tax-filing forms you will need to fill up with your employees.
One such example is the W2 form for employees who have earned more than $600, where some components such as social security or Medicare were withheld. Also, consider future expenses such as bonuses.
Similarly, if you work with contractors, you will need them to fill out a W9 form. Another form to consider is the1099. Under this category, there are a variety of forms to fill for different circumstances. Find out the ones required for your employees and fill them out diligently! Ideally, you need to keep filling out all your forms through the year.
Follow up on Pending Payments (Account Receivables)
Not all customers pay on time. Account receivables are the payments that are due to you. How you are taxed on these depends on your accounting process and at what stage you record the amount as revenue.
For example, some companies record revenue, the moment they make a sale. Others wait until they receive the payment. It also depends on the kind of company you are. If you are a corporation, you pay taxes on your profit. In the case of a partnership, the profit is divided amongst the individuals who then each pay personal income tax.
No matter what your company structure, it is in your best interest to close all unpaid bills at the earliest. Follow up with your customers well in advance.
Make Your Business Look Good (GAAP Compliance)
The New Year brings with it new opportunities; opportunities for people to invest in your company. Your company needs to be following the Generally Accepted Accounting Principles or GAAP, as they are called.
These are a combination of standards that companies are required to follow for their financial statements. Today there are very few states in the country (USA) that are not GAAP compliant.
How Much Are You Worth? (Valuations)
You need to know your company’s market value. More importantly, other people need to know it. A 409a valuation is required annually. Most often companies use this when they want to give their employees stock options. It is also required if you’re company has closed a new funding round. It isn’t necessary to do a valuation at year-end but it is important to do it annually.
If you have this year end accounting checklist under control, you are all set to start planning the bigger picture for your business!