The last few weeks of the year are flying by, and it is time to bring the current year to a close. Whatever else you do at this time of year, just remember that your most important end-of-year financial task is closing your books.
Closing your company’s books at the end of the year is a standard task, and the process should be pretty basic. Depending on your company, it involves looking through the year’s transactions, making sure they are all properly categorized, adjusting entries for any company activities that didn’t make it on your books, and then reviewing to make sure everything balances and ties out.
Why you should close your books?
Properly closing your books helps you:
- avoid accidentally recording a transaction in the wrong year, which can have serious ripple effects for your future accounting and taxes, as you can imagine;
- accurately account for your company’s financial activities from the year, figure out balances that will carry forward to the upcoming year, and start building fresh financial reports for the new year;
- gather the information needed to build your balance sheet for the year;
- organize your business’s revenue and expenses for the year, for your income statement.
If your books aren’t properly closed, you won’t be able to generate accurate reports. They’re essential not only for calculating your bottom line and determining your taxable income, but also for things such as board meetings, audits, and investor presentations.
Whether you’re preparing your financial statements yourself or working with an accountant, such as Goldin Group, it’s important to close your books so the balance sheet, income statement and cash flow are reported accurately. Having these reports updated will make filing your company’s taxes much more efficient.
If you need help managing any aspect of your business’s or nonprofit’s finances, we want to hear from you. Call us at (301) 913-0008 or email firstname.lastname@example.org to make an appointment.