Year-End…a word that triggers stress in some and at mid-year, procrastination in others.
If you were on the front lines last year between December through February, you know all too well everything you had to do to research, compile, and chase down answers for the partners and accountants. Guess what? Now is the time to get a jump start on the year-end process and minimize the stress! Here are a few things you can do now to avoid most of the stress and chaos you experienced last year.
- Confirm your accountant gave you year-end adjustments, and that they are posted.
- Make sure your checks, receipts, and bank reconciliations are up to date as of right now, and keep them up to date for the balance of the year.
- Assure that all trust transactions are entered into your trust accounting system.
- Review the corrections you made last year and correct the same items now for this year. Some examples are:
- Payroll allocations – Confirm entries are posted correctly to the salary and payroll tax expense accounts.
- Large purchases – Did you buy any computers or furniture? Any plans for large purchase before year-end? If so, consult with the accountant to determine if those items should be allocated as an asset or an expense.
- Line of Credit payments – A common error is the improper allocation of payments to principal and interest.
- Credit Card payments – Confirm the payment is allocated to the various expense accounts (i.e. supplies, travel, meals, etc.). A lot of effort is wasted reviewing the statements after-the-fact to properly correct and reclassify the transactions. Making the effort now will save precious time in December and January.
- Meals – Speaking of meals, do you understand what is considered a tax-deductible meal? Many do not, so ask the accountant now to correctly post the transactions in two separate expense accounts.
- Vendor Payments – Do you have W9 forms so you can easily prepare the 1099s?
- Let your firm’s timekeepers know how many hours they have billed YTD and if they are falling short of their annual goal. Provide them with target reports or dashboards showing actual and expected time.
Year-end can be busy, but with a little preparation now, you will be in a much better position to report accurate information and minimize your and the accountant’s time, and their expense to prepare the tax return.
Written By Cindy Melfa
Cindy is a Partner with Affinity. She helps clients solve the sometimes-challenging demands of working in law firm accounting. Cindy loves working hands-on with clients in all aspects of selecting, implementing and maintaining accounting systems and navigating the world of bookkeeping and financial management. Cindy is also an excellent trainer certified in many of the products supported by Affinity.