How to Prepare for Year-end With Your Bookkeeper

In small business, year-end financial preparations can feel like a tightrope walk. The stress of ensuring accurate records, timely tax filing, and smooth audits can be overwhelming, especially if last year’s experience was anything but smooth. The partnership between a business owner and a bookkeeper is paramount during this time. Here’s how to ensure this year-end is more streamlined and less stressful.

What do bookkeepers do at year-end?

Effective bookkeeping at year-end is more thorough than interim (monthly) closes. Every balance sheet account should be reconciled to an external schedule, unsupported transactions eliminated or written off, and support schedules stored following good financial record management.

Another accountant should double-check your year-end bookkeeping to verify the accuracy of your bookkeeper’s work. At a minimum, perform a ruler check on the profit and loss statement, balance sheet, and cash flow statement.

How do you prepare year-end bookkeeping?

Follow these three steps to avoid a chaotic year-end scramble and hit your deadlines with confidence:

  1. Determine your year-end deadlines.
  2. Assess your bookkeeper’s capabilities.
  3. Perform a year-end post-mortem.

Determine Your Year-end Deadlines

Missing a financial deadline can be a costly oversight. Here’s a checklist of common deadlines:

  • 1099’s: Due by 1/31. Ensure all your contractors have provided accurate information.
  • Tax Preparations: Aim to provide financials to tax preparers by early February. If that’s not feasible, be prepared to request an extension.
  • Board of Directors meetings and other business planning events.
  • Bank covenant reporting: often due 60-90 days after year-end.
  • Audits: Remember, the auditing process can span weeks or months after the year-end close.

Assess Your Bookkeeper’s Capabilities

Your preparation and support will depend on the strengths and weaknesses of your bookkeeper. 

For Strong Teams:

Your primary role is to support and protect their focus. For instance, expedite the collection of credit card receipts from teammates or protect your bookkeepers from being dragged into unnecessary meetings or emails.

For Teams Needing Guidance:

If your bookkeeper is inexperienced or unable to manage themselves effectively, leadership is crucial to successful year-end bookkeeping.

  • Prioritize: Guide your bookkeeper on what needs immediate attention. Focus first on cash, followed by revenue and inventory, then assets and liabilities.
  • Assign roles: Define responsibilities and set deadlines.
  • Stay Engaged: Arrange daily huddles to gauge progress and spot any roadblocks.
  • Bring in extra help: Consider the support of outsourced bookkeepers or accountants when necessary.

Perform a Year-end Post-mortem

Once completed, reflecting on the year-end process is crucial for continuous improvement.

  • Document Everything: Which processes went smoothly? Where did you face hurdles?
  • Pain Points: Identify the tasks that consumed an inordinate amount of time or were particularly challenging.
  • Looking Ahead: Pinpoint 2-3 initiatives to improve the coming year’s close. Assign responsibilities and set follow-up dates to ensure implementation.

While the year-end can be daunting, closing the books is also an opportunity to strengthen your team and processes. With thoughtful business planning, understanding your team’s strengths, and an effective post-mortem, you can set the stage for a more seamless year-end next time around. It’s about learning, growing, and ensuring each year is smoother than the last.

This article was written by a CFOshare employee with assistance from generative AI for rhetoric, grammar, and editing. The ideas presented are a combination of the author’s expertise, original ideas, and industry best practices.

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