New Year Bookkeeping Tips for Business
The start of each new year provides you with a fresh opportunity to keep your bookkeeping current and thorough. It is the ideal time to close out your books from the previous year and start new spreadsheets for the upcoming year. In addition, most businesses must file a range of tax forms at the beginning of each year based on sales and payroll from the previous year.
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Closing Out the Previous Year
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Closing out your books for the year can seem like a chore, but it's more productive to treat it as an opportunity to gather the information you need to see your financial information from the year as a whole. Complete your ledgers, and add monthly information to create yearly totals in each category, as well as a total of all of your expenses. Create an income statement listing categories of income and categories of expenses, and then subtract gross expenses from gross income to calculate profit for the year. Create a balance sheet listing all of your assets and all of your liabilities, and then subtract the liabilities from the assets to calculate your current net worth.
Evaluating the Previous Year
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Take the opportunity created by closing out your books to evaluate your financial situation as a whole, compare it with previous years and set goals for the upcoming year. The long view that this process provides gives you the opportunity to see trends and potential problems in ways that can be difficult to spot from the perspective of day-to-day operations. Pay especially close attention to your income statement, using the information it provides to assess whether you are spending too much on any category of expense, and whether your resources are effectively allocated in keeping with your different types of revenue streams.
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Paying Taxes for the Previous Year
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Keep track of all the tax forms you must complete at the beginning of each year. Complete these forms as early as possible, even if you are not required to pay them right away. The process of completing them will tell you your total tax liability and enable you to budget to pay these taxes by the end of the month, when they are due.
Starting the New Year
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Set up your spreadsheets and ledgers for the current year. Set goals for keeping up with your bookkeeping process, based on your experience closing out your books from the previous year. For example, if your year-end process of finishing out your books was more work than necessary because you were two months behind in your ledgers, set a goal to update your ledgers every week.
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References
- Photo Credit tax form image by yang xiaofeng from Fotolia.com
