It’s that time of year. Santa is “making a list and checking it twice.” Accounting managers should do the same: They should prepare a year end closing checklist.
Not all year end tasks must be accomplished before December 31st but, without a checklist, managers can miss critical, time-sensitive steps. In this blog and the ones that follow, I will provide some tips on how to successfully complete critical, year end closing tasks.
A Year-End Closing is the process of reviewing, reconciling, and verifying that all financial transactions and aspects of a company’s fiscal year ledgers are in order. It is a necessary step for the preparation of yearly financial statements and to prepare for a possible audit, internal or otherwise.
Where to start? I tell clients that the first step in any year end checklist is this: Check with your CPA or tax advisor. He/she will provide a list of information needed for the compilation or review of your financial statements and for the preparation of your state and federal tax returns.
Typically, such a list would start with these initial (pre-December 31) steps:
Key Account Data
Download transaction list (pdf or .csv) files or gather copies of all bank, investment, credit card, loan, and other statements through the current date. Get started now; don’t just wait for the 12/31 statements.
Legal Document Copies
Your accountant will need copies of your office lease, loans, equipment/car leases, grants, fundraising documents, capitalization table, and other legal documents.
Prior Year Information
Download or make copies of prior year tax returns, sales tax filings, payroll tax forms (941 . . .), and financial statements.
1099 Vendor Information
Gather tax and contact information for all vendors. Send W-9 forms to all vendors for which you do not have an EIN or SSN number.
Prepare a Closing Schedule
Identify the important dates and the activities associated with each deadline. These include reporting and data processing deadlines, a listing of account reconciliations, updated loan amortization and depreciation schedules, vacation accruals, and the like. In short, create a closing schedule.
OK, now you that you have gathered the appropriate information, and you have a closing task schedule, it’s time to begin the actual year end closing tasks.
See my next blog for more details and next steps.