Getting your books ready at the end of the year might sound like a lot, but it doesn’t have to be stressful. If we take a little time now to line things up before January rolls in, we can save ourselves a lot of last-minute scrambling later. Looking at what’s come in, what’s gone out, and what still needs to be filed gives us a clear picture of where our business stands. This is where managed bookkeeping services can make a real difference. When everything is accurate and easy to track, we’re in a better spot to claim deductions, avoid errors, and hit important deadlines without panic.
Review All Income and Expenses
A smooth January starts with a clean December. One of the most helpful things we can do is take stock of all our income and expenses before the year ends.
- Pull together all invoices, receipts, and financial records from the year. That includes everything from client payments to office supplies.
- Make sure nothing is missing. Any gaps in records could throw off our totals or leave out expenses that may qualify for deductions.
- Keep an eye on regular expenses like rent, utilities, insurance, and subscriptions. These often stay the same each month, so it’s worth confirming that they’ve been recorded consistently.
- Review all sources of income, especially if we had side jobs, one-time contracts, or sales outside our usual channels. Make sure those amounts are included and properly categorized.
Having a full snapshot of our financial year helps us answer questions quickly if they come up later. Plus, it lays the groundwork for the bigger steps that follow. Understanding the IRS recordkeeping requirements for businesses also helps make sure we’re keeping the right documents on file. It’s a good practice to keep copies, both digital and paper, in a way that is well organized. Sometimes, questions or audits come up long after the year is over, and having everything at your fingertips is a real time saver. If you work with an accountant or a preparer, they will likely appreciate the extra effort you took to keep things neat.
Reconcile Accounts and Fix Mistakes Early
Once the records are gathered, it’s time to check that they line up. Reconciling our accounts means we compare what’s in our books with what’s in the bank.
- Start by matching bank statements and credit card accounts to what’s recorded in our bookkeeping software.
- Look for any missed transactions, duplicates, or wrong amounts. It’s easy to skip something by accident or enter it in the wrong spot.
- Pay attention to any transfers between accounts or payments that haven’t cleared yet. We want each piece to land in the right category.
Mistakes are common, especially in months when business is hectic. The good news is that finding errors now gives us time to fix them without rushing. Clean, balanced numbers give us confidence that reports will add up when tax season kicks in. It also helps when it comes to avoiding tax return errors that could cause delays or problems later on. Caught early enough, a wrong entry or missing payment can be corrected, which means more accurate totals for the whole year. Going step by step through each account practically guarantees you won’t have big surprises later. Even little things, like a check that didn’t clear, can create confusion next spring if not dealt with now. Making the process routine each month helps prevent a last-minute rush at the end of December.
Prepare Financial Reports for Your Tax Preparer
With our books in order, it’s a lot easier to create the year-end reports that get sent off to whoever is handling our taxes. These reports don’t just help with filing. They show how the year went and where we might want to make changes going forward.
- Pull a full-year profit and loss statement. This shows what we earned, what we spent, and what’s left after expenses.
- Run a balance sheet to get a look at assets, outstanding debts, and any other assets tied up in the business.
- If anything looks off, like an unexpected drop in income or a spike in spending, it’s smart to mark those spots and make notes to explain them.
Bringing clear reports to our tax preparer is a big part of making tax return preparation easier. Fewer follow-up questions mean fewer delays and a lower chance of missing something important. Organizing reports not only makes your life easier but also helps your preparer focus on finding ways to help you and your business. If you find things that don’t add up, or you see something unexpected, it’s always better to bring those up now rather than wait. Putting in those short extra minutes now can save a lot of time and back-and-forth later.
Don’t Forget Payroll and Contractor Payments
If we paid employees or independent contractors this year, we have to make sure those numbers are ready, too. Payroll often comes with strict reporting rules, especially around the end of the year.
- Confirm that all employee paychecks are correct and fully processed. That includes holiday bonuses, PTO payouts, and any last-minute corrections.
- Update totals for benefits, contributions, and withholdings so they reflect the full year.
- For independent contractors who’ve earned more than $600, gather totals so 1099 forms can be sent out and filed on time.
Staying ahead of 1099 vendor management can make this step a lot easier. And if you’re not sure who qualifies, the IRS 1099 reporting requirements for contractors offer helpful guidance.
Missing these steps or filing late can cause problems later. By getting these tasks done before January, we avoid the rush and reduce the chance of mistakes. It’s helpful to keep a checklist for payroll, benefits, and contractor payments, so nothing gets left behind. A quick double-check now can save lots of stress when year-end deadlines are near. Each year might bring its own surprises, so staying flexible and careful as you go through records is always smart.
A Clean Finish Sets You Up for a Better Year
Taking some time in December to close out the books brings a lot of peace of mind. We don’t want to start the new year fixing last year’s mess. Instead, we want to be planning ahead with a clear idea of what worked, what didn’t, and what we want to do differently.
Finishing tax return prep before the year turns over helps us stay on top of deadlines and avoids the pressure that usually hits mid-January. When our paperwork is already in good shape, we get to start January focusing on goals instead of playing catch-up. A little effort now gives us more clarity and a stronger footing going into what’s next. Starting off the year with organized books not only makes tax season easier but also puts your business in a spot to make smarter plans quickly. When you aren’t overwhelmed by cleaning up last year, you’re ready to spot fresh opportunities, invest wisely, or shift gears if needed.
FAQs
What is tax return preparation?
It means gathering all your business financial info, like income, expenses, payroll, and reports, so your taxes can be filed correctly.
Do I need to finish bookkeeping before tax season?
Yes, it’s best to close out your books before sending anything to your tax preparer. That way, your numbers are clean and accurate.
What if I find mistakes in December?
That’s actually a great time to find them. You can still fix things before final reports or forms go out.
Are contractor 1099s part of tax prep?
They are. If you paid anyone more than $600 and they’re not on payroll, you probably need to send a 1099 and report that in your totals.
Is it okay to use software alone for tax prep?
Software can help, but having someone review your work or handle it completely is usually a smarter move. It saves headaches later.
At Cloud Bookkeeping, we understand the importance of getting your taxes in order before the year wraps up. By focusing on tax return preparation, you can eliminate last-minute stress and ensure accuracy in your filings. Our expert team is here to help you organize your finances so you can head into the new year with confidence and clarity. Contact us today to take the first step towards a hassle-free tax season.
