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Close Your 2018 Books!

ZümiFi - leveraging clean financials to ensure your success!

Now that your 1099s have all been filed, it’s time to wrap up your 2018 books. In addition to the regular monthly activities of reconciling all your bank and credit card accounts, and reviewing your A/R and A/P reports for accuracy there are a few additional items we recommend you do to ensure your 2018 are squeaky clean:

  • Reconcile all loans to ensure the principal balance per your loan statement at year-end matches the Balance Sheet amount showing
  • Reconcile your Sales Tax Payable account to ensure the 12/31 balance matches your Q4 payment remitted in January.
  • Review all of your fixed asset accounts. Make note of any new purchases made in 2018 and also confirm that if these show on your Balance Sheet they coincide with the capitalization policy your CPA is using. Many CPAs now set capitalization policies at a $2,000 or even a $2,500 threshold meaning that you can simply expense any items purchased that fall below those thresholds. If you have made purchases which should be capitalized, be sure to have clear memos so your tax preparer knows exactly what those items were and can easily add them to the depreciation schedule on your tax return.

Close Your 2018 Books!

  • Note any items “retired” in 2018. If you made new fixed asset purchases, you may well have replaced some old items that are now no longer in use. Make note of these, as you will need to communicate these retired items to your CPA as well so they can update your depreciation schedule accordingly.
  • Review any Prepaid Expense accounts – are the balances as of 12/31 accurate? Sometimes items get posted here, but not updated correctly throughout the year, so best to confirm all is accurate before you close out the year.
  • Review your Accounts Receivable – are all the open balances items you expect to receive payment for? Are there any noncollectable amounts that you might want to write off instead?
  • Review your Petty Cash account – does the balance showing in your books match the actual cash you have on hand? Have you recorded receipts for all expenses paid in 2018 using the Petty Cash?

Once you have done a thorough review of your books, it’s time to hand them off to your CPA. Provide them with either direct access to your QuickBooks Online file, or provide them with both your Balance Sheet as well as your Profit & Loss report for the year. Make sure you are providing financials that reflect the basis you will file your taxes on – for many small businesses, you will file your taxes on a Cash Basis. In that case, make sure the financial reports you provide to your tax preparer are also on a Cash Basis. Make all efforts to provide complete information to your tax preparer by February 15 to allow them sufficient time to prepare your taxes. This is a crazy time of year for them, so no need to complicate that by making them rush through your return.

After you have closed your 2018 books and handed financials over to your CPA take a moment to review your business performance. Did you meet your goals for 2018? Exceed them? What were your greatest successes in 2018? What were the surprises? How do you think 2019 will likely be different? Are there expense categories that you need to revisit to see if you can reduce or better control those expenses? Are there revenue opportunities that you should focus on? There is a ton to learn from a thorough review of your financials, and we’ll talk more about that in upcoming posts…

ZümiFi – leveraging clean financials to ensure your success!

Close Your 2018 Books!

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