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Close Your 2022 Books!

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Now that you have filed your 1099s, it’s time to finalize your 2022 accounting records. In addition to your regular monthly tasks, such as reconciling bank and credit card accounts and reviewing accounts payable and receivable reports, we recommend taking the following actions to ensure a smooth start to 2023:

  1. Reconcile all loans to verify that the principal balance on your loan statement matches the balance sheet amount.
  2. Reconcile your sales tax payable account to ensure the balance on December 31st matches the payment you remitted in January.
  3. Review your fixed asset accounts. Please note any new purchases made in 2022 and confirm that they align with your CPA’s capitalization policy. If you have made a purchase that should be capitalized, make sure to provide clear documentation to your tax preparer.
  4. Close your 2022 books.
  5. Note any items that were retired in 2022, such as old fixed assets, replaced with new purchases. Make sure to inform your CPA about these retired items so they can update your depreciation schedule.
  6. Review your prepaid expense accounts to ensure the balances are accurate as of December 31st.
  7. Check your accounts receivable to confirm that all open balances are for items you expect to receive payment. Then, consider writing off any noncollectable amounts.
  8. Review your petty cash account to ensure the balance in your records matches the cash on hand and that you have recorded receipts for all expenses paid in 2022.

Once you have thoroughly reviewed your books, provide them to your CPA and access to your QuickBooks Online file, balance sheet, and profit and loss report for the year. Make sure these financial reports are based on the same method you will use to file your taxes, such as the cash basis. Aim to provide complete information to your tax preparer by February 15th to allow them enough time to prepare your return.

After you have closed your books and given your financials to your CPA, take some time to reflect on your business performance in 2022. Did you meet your goals? What were your biggest successes and surprises? How do you think 2023 will be different? Is there any room to reduce or better control expenses in certain categories? Are there any revenue opportunities that you should focus on? A thorough review of your financials can provide valuable insights, and we will discuss this topic further in future posts.!

Close Your 2022 Books!