Fourth Quarter Is Here! 5 End-of-Year Bookkeeping Tasks to Do Right Now
When was the last time you opened your QuickBooks account? If it’s been a while, don’t worry—we’re not here to shame you. But we do want help you get started on your end-of-year bookkeeping so you can enjoy a smooth and easy tax season next year!
We’re big believers in saving small businesses money in taxes. And that starts with clean bookkeeping. Time and again, we’ve seen that following accounting best practices means:
No late-night dates with QuickBooks while your family is in the other room hanging out.
No middle-of-the-night panic attacks when you realize you didn’t pay your payroll taxes.
No more desperately trying to cram six months’ worth of bookkeeping tasks into three days.
In other words… clean books equal peace of mind. Simple as that.
So where do you start? What tasks do you need to do right now as you head into the fourth quarter?
1. Make Sure All Months Are Reconciled
There’s nothing worse than getting to the end of the year and realizing that your books haven’t been reconciled since April. You end up wasting hours going through each and every transaction or trying to find the missing expense that’s throwing off an entire monthly statement.
Trust us, it’s better to reconcile as you go. And if you haven’t done that so far this year, now is the time to start.
Remember, if your books are too much of a mess to handle, you can call us and we’ll happily get them back on track for you. Click here to talk to us.
2. Properly Store Your Receipts
No, we’re not talking about shoving paper receipts in an old shoebox. If this has been your method till now, consider this your official wake-up call!
Paper receipts get easily lost, making end-of-year bookkeeping a frustrating disaster. They also tend to fade quickly—far sooner than the seven years the IRS recommends holding on to them.
That’s why we always encourage clients to store their receipts digitally, preferably in their accounting software. That way, every receipt can be linked to a specific transaction, and your accountant doesn’t need to fumble through a thick stack of paper when filing your tax return.
3. Record All Your Business Expenses
Business owners often ask us how they can save more money on their taxes.
Our answer? Track all your business expenses.
Yes, all of them.
If you’re a new business owner, then you may use personal money sometimes to pay for business expenses. Or you might forget to label that chunk of personal change you put into your business account as owner’s equity.
Not properly tracking and labeling your business expenses means the profit you list on your tax return will be wrong. This is a big deal because you’ll end up paying an incorrect amount in taxes!
Our advice? Meticulously track your business expenses, no matter how you pay for them.
4. Check Your Payroll Liabilities
Payroll isn’t a set-it-and-forget-it system, so take a few minutes this month to make sure your payroll liabilities are on track.
Fourth quarter is the perfect time to check your payroll statements and make sure you’re up to date paying the withheld taxes. These vary state by state, but generally you need to withhold and pay local, state, and federal income tax; your and your employees’ portions of Social Security and Medicare (FICA taxes); and federal and state unemployment tax.
In Washington, you don’t pay state or local income tax, but you do have state unemployment and workers’ compensation taxes to deal with. And starting in 2022, you’ll need to pay the new long-term care payroll tax.
Outstanding employee wages can throw off your books, too, so check their payments. Have all employee checks been cashed? Or have all direct deposits gone through?
5. Review Your Business and Occupation Tax for the Year
Some states and cities have what’s called gross receipts tax, sometimes labeled Business and Occupation (B&O) tax. Unlike sales tax, businesses are the ones who pay this, not consumers.
In Washington, B&O tax has four major classifications: retailing, wholesaling, manufacturing, and service and other activities. Each of these has a different tax rate. (Click here to see the various B&O tax rates in Washington.)
If your business makes $100,000 or more in gross receipts, then you’re responsible for paying B&O tax. Now is the time to sit down, make sure you’re caught up with these payments, and talk with your accountant to make sure you’re paying the right amount!
End-of-Year Bookkeeping Can Be Smooth & Easy
If you keep up with your accounting all year round, these end-of-year bookkeeping tasks can be a breeze. So save yourself a major headache and get started on them now!
And if you need help, Foray Business Group is just a phone call away. Call us at 360-818-9319 or set up a virtual meeting to get started!