Tax season is like planning for the holidays. Wait until the last minute and you will be overwhelmed. As a business owner, now is the time to set aside a few hours each week to prepare end-of-year tax season items. The team at Rektio has compiled a checklist of the primary items you need to handle now to stay ahead of the end-of-year rush to gather documents. Contact us if you have questions about tax planning or need assistance.

checklist for tax season

Year-End Transactional Entries

  • Enter final accounts payables – Remember, all liabilities for the year need to be entered as of Dec. 31. Now is the time to prepare. Consider employee reimbursable expenses, fees owed to outside sales reps, sub-contractors, etc. and vendor-related items such as inventory and utilities.
  • Issue final accounts receivable invoices – Evaluate cutoff procedures for invoicing to ensure revenue constructively earned by end of the year is invoiced and recorded in the correct period.
  • Process final payroll – Review fringe benefits and non-cash awards to be reported on W2 forms and communicate to payroll service provider. Review all employee payroll information for accurate year-end reporting. Verify payroll-related expenses are booked through Dec. 31 (include quarterly tax assessments).

Balance Sheet Account Analysis

  • Reconcile bank statements – Research unidentified deposits, record all bank charges and interest and research unidentified deposits.
  • Prepare accounts receivables aging – Take time to assess the collectability of all open accounts. All amounts not collectible should be written off as a bad debt. Evaluate balances on all accounts.
  • Inventory – If your business offers products, this is a great time to start taking a complete inventory of all items and reconciling balances.
  • Prepaid expenses – Do you have expenses that should be spread out over the year? Be sure these items are recorded properly and reconcile unamortized balances to the service term.
  • Fixed assets – Retire any fixed assets not currently in use, confirm gain/loss on fixed asset sales and calculate and record year-end depreciation.
  • Accounts payable – Review any credit balances with vendors. If there are balances, request a refund. Also, resolve non-current payables.

Financial Reports

  • Compare current year profit and loss statements – Compare significant variances to budget, large variances year over year and Issue P&L Statement for management review/approval.
  • Print Balance Sheet/Cash Flow Report – Confirm all account reconciliations on the balance sheet and compare forecast and budget.

Year-end payroll tasks

Confirm with your payroll service provider what forms are required and order as necessary. Verify state quarterly and annual forms in addition to Quarterly 941 and Annual 940. Also, prepare or verify W-2 and W-3 forms. Verify you have current W-9 forms on file for all required payees. Review vendor list for 1099-eligibility. Identify all G/L accounts for 1099 eligible services and determine reportable amounts for 1099’s.

Rektio Accounting helps businesses stay organized throughout the year through a variety of tax-planning services. Learn more about us.