Successful Tips for Small Businesses for Closing Accounting Books at the End of the Year

At the end of every financial year, owners go through a hair-raising experience: closing the accounting books for their businesses. It is not rocket science. Rather it is a compliance-related task which makes it something scary. You cannot get it wrong for fear of a bogeyman. It is a stressful time.

They need an experienced accountant to close the accounting books. It involves following standard accounting procedures and processes like:

• Account reconciliation
• bank reconciliation
• Preparation of financial statements
• Tax filing; etc

To close the accounting books efficiently, you need to execute the task in a structured way. Here are a few accounting tips for small business owners which will take the stress out of the task. These also reduce the chances of committing any errors.

10 Key Accounting Tips for Small Business

1. Follow Statutory Regulations

Regulating agencies change accounting-related rules from time to time. Check if there are any changes and how they affect your task. It will enable you to avoid any mistakes and close the accounting books for your business successfully. It shows that your financial reporting has been completed sticking to the accounting standards.

If your books are up-to-date, post journal entries, then prepare financial statements and management reports. These documents indicate your business' financial health over the accounting period under discussion.

2. Prepare and Send Invoices

You cannot close accounting books without updating the business' earnings and expenses records. It is a critical task.

So, prepare and send invoices if you haven't done so. You also need to prepare invoices for unbilled products and services rendered.

3. Track Unpaid Invoices

Use your accounting software to know the customers who have unpaid invoices. Send emails or call them and remind them to pay.

Be persuasive and let them know your situation. Otherwise, you will have to write off unpaid invoices as bad debt to accurately close the accounting books of your business.

4. Record all Your Business Expenses

Recording all your business' expenses is crucial. Go through all of your bills from your vendors for the current year and enter them under the 'Expenses.'

Keep track of your business costs. You should know that you can claim tax deductions on these. Classify these transactions as business cots using reporting tags. It will simplify the task when it is time to claim the deductions.

Regular updating of books of accounts helps in closing the books accurately. It also gives you clear knowledge about your business' financial status and profitability.

5. Latest Accounting Software

Closing accounting books is a lengthy and complex process. Automate your business' accounting using the latest accounting software.

It will give you correctly dated and classified transactions. Using the software, you can also classify these transactions into uncategorised income, expenditure, Etc.

This digitised financial data is reusable. And your system makes complex accounting operations easy. Updated records lead to an efficient and hassle-free closing of books of account.

6. Track and Update Your Mileage Log

The end of the financial year of a company is a rush time. You have to expedite a tonne of accounting tasks and meet due dates to be compliant. It is easy to forget to update important information.

Ensure to update your mileage logs, or it will affect your tax deduction. If possible, use your accounting software to track your mileage and update the appropriate records.

7. Separate Business and Personal Expenses

Getting your business and personal expenses mixed creates confusion. It also causes stress and creates extra work when you are working against time.

You can overcome this issue by simply opening a corporate bank account and using it for all your business-related financial transactions.

It immediately simplifies the accounting tasks you have to do at the end of the fiscal year. Bank statements are very useful to ensure the accuracy of the business' data that you have recorded. To the point and pertinent data obviously eases closing of books of account.

8. Appoint an Accounting Service

You need to know accounting concepts and principles to update the books and tax planning. The tasks are time-consuming and resource intensive.

Many owners outsource it to experienced accounting service providers. Their accountants know the task thoroughly and take less time to do it. They also keep the tax amount minimum by claiming appropriate tax deductions.

9. Prepare Financial Reports

You can be proactive and prepare financial statements and management reports monthly or quarterly. It will help you in making business decisions and influence the business' cash flow. It will shorten the time for the closing of accounting books.

10. Update Your Company File

You need to ensure that your business' financial and accounting data is safe. Create company files to store this data. At the end of your financial year, let your accountant access and update them.

Hiring the right accounting services provider saves you time, effort, and money. Their accountants know how to analyse financial data. They share deep insights for you to use in making effective business decisions.