Year-end is always a hectic time. There’s the internal documentation, the state and federal filings and the preparation for both audit and tax time. It’s okay to be a little overwhelmed.
One thing to note is that it’s never too early to start preparing. We live in a world where activity happens every day which affects your tax planning and your audit. Paying attention and staying up-to-date is vital to your preparation.
Here are a few tips to help you get prepared.
Review, review, review.
At a minimum, you should have a review process in place that documents when purchase orders are created, when bills are paid and when cash/checks or electronic payments are reviewed and deposited. This will help lay a solid foundation to ensure you’re on the right track.
Monthly you should be doing reconciliations for the following common accounts:
Doing these tasks on a monthly basis will help you establish review and control habits. Need one extra layer of review? Have your management or ownership team review all financial information before you submit it to your CPA. You might catch a mistake that needs to be fixed.
Don’t forget about year-end.
By taking the time to set up monthly processes, your year-end procedures should be a little less burdensome. After all, you’ve been addressing these issues throughout the year. However, there are still some things to keep in mind as you approach year-end:
Designate a point person.
Designate an employee to serve as the main contact with your CPA. This is usually someone who is responsible for most of the financials, or someone with strong project management skills.
As a side note, if you outsource your accounting, your outsourced accountant can serve as your CPA’s main contact.
Know what they’re looking for.
Take a look at the tax organizer list or list prepared by the client that your accountant or auditor gives you. It may sound simple, but you need to make sure all these items are good to go. It also doesn’t hurt to have it reviewed by someone else too.
When it comes to your audit, know when your auditors plan to be on site or work on your information. Ensure your main contact is around and has the answers they need. The assistance of these people can ultimately improve the turnaround time on your audit and tax return.
Think big picture.
As you’re preparing for your audit or tax preparation, here are some other points to consider:
Year-end can be tedious and time consuming, but by taking simple steps during preparation, you can make the process go a lot smoother. And remember, your CPA is hired by you to help you. Audits and taxes help give you a picture of what’s happening in your business. Your CPA can be a valuable ally on the road to growth and success for your business.