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  • Writer's pictureA Bigger Bottom Line, LLC

Year End Planning

Updated: Dec 14, 2023




It's that time again!


Now that we are firmly in the last Quarter of the year, it is time to start looking forward to the end of the year.


Although your fiscal year may not line up with the calendar year, closing your books properly is still a very important task. It “locks in” your data and ensures you aren’t entering information into the incorrect period, account, or financial report. This happens a lot and doing a proper year-end close is the easiest way to avoid this issue and to ensure you maximize your tax deductions.

However, scrambling to close your books in the midst of the holiday season is usually a recipe for errors. We suggest a structured plan to prepare for your year-end close in QuickBooks with your bookkeeper and CPA in the conversation.


Although reaching the end of another fiscal year is a reason to celebrate, there are additional bookkeeping processes that need to be checked off your to-do list. QuickBooks & your bookkeeper can help save you valuable man-hours due to built-in features for organizing your books. This will translate into a stress-free tax season in April.


Book a Meeting with your Bookkeeper & Tax Professional

The best way to ensure you cover your bases is to get some time scheduled with the professionals you trust before the year ends. Remember, the smart business owners will schedule these appointments early so your advisors may already have their calendars booked up before year-end. There are also holidays and office closures to think about so be sure to get your appointments booked earlier on. If you are a subscription member at A Bigger Bottom Line, simply call our office or click this link to book a meeting. You can also ask us to include your CPA in both our client portal and QuickBooks Online so we can start having electronic conversations in a secure environment to begin the planning process. If you are not a member and would like to learn more about A Bigger Bottom Line and how we can help you this year with your tax planning, click here to book a Free 20-minute consultation. Be sure to act now before the best times and dates are picked off.

Reconcile Your Balance Sheets As dull as it may sound, you have to make sure all account reconciliations are complete and cleared of any old transactions. You need to be able to validate any negative amounts appearing on the accounts receivable and accounts payable detail reports, and ensure that your previous balance sheet and tax return are a match. Your fixed assets will need to have depreciation booked so be sure you have a list of all your fixed assets. If any were improper codes to the P&L as expenses you need to address a resolve with your bookkeeper before doing your depreciation. Check to see if there are any open loan Liabilities to close and interest to book. Equity Accounts also need to be reviewed and closed where necessary. Remember, payments to owners are in these accounts. Make sure you review these in detail and address any concerns. There might be some transactions to reclassify or even to resolve from past periods and you really need to know what you are doing to get this right. Definitely get a pro to do this part. Many people don't realize that QuickBooks will close all prior year Net Profits to the Retained Earnings account automatically. So if you make any changes to a prior year, this will have an effect on your current year Retained Earnings on your Balance Sheet and could cause major issues in your financial records, These issues can be very hard to even identify in the audit log for resolution. So make sure you get some time booked with your bookkeeper and CPA to make any corrections where needed. If you have not already sent your bookkeeper your tax return from last year, be sure to get that over to them asap as that is the basis for getting this right.


Review your Profit & Loss

Does the total Income amount look right? How about the total Cost of Goods Sold and Expenses? Do you see any negative amounts in any accounts? Can you spot any accounts that may be duplicated and need to be consolidated into one? Are any transactions miscoded to the wrong account? Has Interest Expense or Depreciation been booked yet? What's in the 'UnCategorized' or 'Ask My Accountant' accounts? If you are a client at A Bigger Bottom Line we'll add these transactions to your client portal in the in #Clarify section for your review. These are the questions that all good bookkeepers ask when reviewing the Profit and Loss financials. These are the same questions every business owner should be asking themselves at year-end (and throughout the year) when reviewing their Profit & Loss statement. If the numbers don't look like a true reflection of your business then it's time to "drill down" into each account to identify why certain transactions look the way they do. Having a bookkeeper look over things with you is the best way to get the results you need as they can navigate the software of QuickBooks for you while also helping you to navigate the accounting side of things as well as it all related to debts, credits, and the most appropriate accounts to choose from.

Reconcile Your Bank, Credit Card, & Loan Accounts It is important to go through your bank statements on a regular basis and ensure there is a matching transaction in QuickBooks for each. It is also important to check for any duplicate transactions in your QuickBooks file that are not on your statement. These "uncleared" transactions must be determined and resolved before year end. Checking your statement also helps you catch any fraud and ensures that the bank and/or credit card company have not made mistakes. It is also a good way to root out any ongoing charges that you may not want to carry into the new year. By reviewing your statements you can also look for online products, trade publications, or membership organizations that are re-occurring. If these are no longer important to your business then this is a good time to cancel them and recoup the savings (if you are a client of ours we will give you an Expenses by Vendor Summary report to spot these as well). Also, if you have any loans you'll want to be sure that the interest has been recorded on these properly to your P&L. Only your monthly or year-end loan statements will properly show the total interest paid out and principle portion so be sure to get these statements. If you have a subscription with A Bigger Bottom Line, then we will ask for your statements monthly and do this reconciliation for you, so long as you've supplied us with all your statements on time (and any check and deposit images we've asked for). Remember, yearend work can't get started on until January and typically can't be completed until February so you'll need your bookkeeper around through February if want them to do yearend reports for you. If you are not regularly supplying your bookkeeper with statements, check images, and deposits, then you might incur "out of scope back work" change order invoices for dumping all this info on them all at once. Be sure you get these documents over to them right away in order to ensure that your books are in order. Otherwise, you may see a lot of transactions hitting your "Uncategorized Transactions" or "Ask my Accountant" accounts (#Clarify in our new portal). This can throw off the numbers across all your financials so be sure to provide feedback to identify what they relate to. If you are a client of A Bigger Bottom Line, check your client portal TO DOs and #Clarify section as we likely have some listed in those place for your review and comment. If there are a large number of them we will provide a link to an online Google Sheet where you can provide us feedback outside of QuickBooks. Then we'll handle the updates for you in QuickBooks before the books are closed. If the books are already closed for a prior period and you provide more information later that relates to the prior period, there may be some out of scope charges assessed. Typically back work on prior periods is only done at the start of your engagement during the clean up project. So if you provide a significant amount of info for closed prior periods you should expect an additional fee. Best to get your statements and feedback turned in right away!

Schedule A Physical Inventory Count You will want to take stock of everything you have on hand as of the LAST DAY OF THE YEAR so that you enter the next fiscal year knowing how much money you have tied up in inventory. The value of your inventory on hand as of the last day of the year is the most important number to give your CPA and Bookkeeper for inventory. Your inventory value is the cost price you paid for the inventory (not the sales price to your customers). You can also check for losses, determine upcoming promos based on stock availability, and true up your inventory count / value with your books. Adjustments to your Inventory may need to be made which will affect your Cost of Goods sold account on your P&L at yearend. Your bookkeeper should make these adjustments and work with you and your CPA to ensure costs are not duplicated or reported on the wrong basis when adjustments are made. If you don't sell products then you may not have any inventory to count at yearend; however, you may have Fixed Assets to track such as office furniture, equipment, or vehicles.


Update your Fixed Assets Log

If you bought or disposed of office furniture, equipment, buildings, or vehicles for the company then these items should be added and updated to a list called your 'Fixed Assets Log'. You need to keep track of the purchases you made that are generally over $2,000 and have a useful life of more than a year. These items need to be tracked separately as they will be capitalized and depreciated over time rather than expensed on your P&L the year you bought them. It's important that you catch these before year end because you can't have the fixed asset in two places in your financials. You must categorize fixed assets on your balance sheet, not as an expense on your Profit & Loss. So be sure any fixed assets are coded properly and recorded on your log so that depreciation schedules can be determined and booked before year end. A Bigger Botton Line Clients will receive a Fixed Asset Recod log that they can use to list these items. Then our bookkeepers work with our clients and CPAs to make sure these items are recorded properly in the financial records. Failure to keep an updated fixed asset log can result in errors on your tax return and financial statements. So make sure to update your fixed asset log before yearend. Book a meeting with A Bigger Bottom Line to learn how we can help you set up this log.

Project Income or Losses for Tax Planning Good bookkeeping records and some advisory services can help you forecast your business’ activity for the new year by carefully analyzing your accounting records. The best time to do this is in the last quarter of the year, as there are several tax planning activities that need to be reviewed in advance BEFORE you do these projections (otherwise it's garbage in garbage out advice). Creating a profit and loss forecast is important because it gives your business a plan base to bring in more revenue and attract future investments. It also allows you to plan for tax season ahead of time and maximize your savings. We can make use of QuickBooks’ customized report feature to identify the areas of your business that need adjustments and we can connect other 3rd party applications that do this even better than QuickBooks for more advanced forecasting. For example, we can look at how much it would cost to take on a new sales rep and see how much profit that might produce as well, or what impact buying a new truck might have. It’s a great way to stay up to date with your business’s financial performance while keeping track of your own evaluations. Upgrade to our Platinum services to get these and other financial insights.

Verify Your Customer Accounts (Accounts Receivable) Clear up your books by going through all your customer files. If you have customers who are late on their payments this can take a toll on your balance sheet at the end of the year. The Aging A/R Summary will show you, at-a-glance, who owes you money and how past due they are. If your goal is to have everyone paid up by the end of the year we suggest beginning your outreach to them at least 60 days prior to your year-end close. Otherwise, they can take a huge toll on your balance sheet. A negative balance on your Accounts Receivable report could mean that an invoice is missing, the amount is wrong, or your customer overpaid you and has a credit balance. Verifying all the transactions in your Accounts Receivable report ensures that these issues don't continue to linger into next year and cause more costly bookkeeping fixes down the road. Your Accounts Receivable report should be crystal clear and should be a true reflection of the money that is owed to your company from your customers. If not, it's time to get it cleaned up before year-end. Then you can send your customers a statement of all open invoices they owe to you and that will speed up collections at year-end. Get help from a pro if you have questions. Book a meeting with our team today.


Verify your Vendor Accounts (Accounts Payable)

The A/P Aging summary and UnPaid Bills report are useful tools in identifying which vendors you owe money to. If you spot any bills that are open on these reports that you think have already been paid, then you need to determine why these bills are still open. Maybe there's a duplicate? Maybe the amount changed? Maybe they paid via an Expense transaction that has not been converted into a Bill Payment. Maybe the bill is truly still open. One way to resolve these issues is to ask your vendor for a statement of account so you can see, from their point of view, of which bills they have on their records as paid and un-paid. Give these statements to your bookkeeper or review them yourself to reconcile and identify the differences that need to be addressed. If you have a lot of bills each month you should be doing this exercise weekly / monthly either on your own or by your bookkeeper to stay on top of what you owe. If you have any errors on your Accounts Payable reports and Expense by Vendor summary reports (open amounts or negative amounts you don't recognize) then this could majorly affect the 1099's you send out to vendors. So getting your open bills right and up to date is extremely important at year-end. It also is the best way to track at any time, what you owe to others.

Gather All W9 forms for 1099 Reporting (filling Deadline is January 31st) There are a number of things that can go wrong in reporting 1099 forms, so be as accurate as possible when reviewing your vendor’s paperwork (W9's that you request from them). Not to mention the costly fines you’ll have to pay if you miss sending out one of these 1099- MISC or 1099-NEC forms. At least one month before doing your year-end close in QuickBooks, we recommend reviewing all your vendors and making sure their records are up to date. Fortunately, QuickBooks Online has a very easy way to prepare and send 1099’s directly to all your customers, vendors and employees that need one. However, identifying exactly WHO to 1099, how MUCH to 1099, and which 1099 FORM to send can be a much trickier process and take quite a bit of q&a with your bookkeeper along with clean records. You have to make sure the information you put in the system is valid and up to date. This can be easier said than done so get with your bookkeeper early on to collect W9's from your vendors and identify how much they have been paid the last year and HOW they were paid (if paid via a merchant processor like PayPal then those companies bear the burden of sending the 1099-K form instead. Your bookkeeper can help you make these determinations while you focus on doing your business). There are many things to consider before you can determine if someone should or should not receive the 1099 so getting W9's from all vendors is usually the best first step at year-end. Then hand it all over to you bookkeeper and review the vendors and amount they think you should 1099 before the deadline at the end of January. At A Bigger Bottom Line we use tools like TrackW9 and GetW9 to help facilitate collecting these form from your vendors through out the year so it's not such a scramble in January.

Close Your Year Although QuickBooks doesn’t require a close process at the end of a fiscal year, it does allow you to set a closing date and password for all your transactions. Closing the books with a password is best practice before you give your financials to your CPA. Before getting started, you’ll need to make sure all books have been reviewed and all reports are completed. By entering a closing date for your books, you can no longer modify transactions from the previous year unless you enter the closing date password. If you have a bookkeeper or CPA they will likely do this for you on your behalf. This is done to protect your prior period books and records, so they cannot be edited or deleted without your permission. The feature can be updated according to your business needs as the software keeps the last closing date on track. Remember: you’ll need to use the password each time you save any changes that affect the balance of the closed accounting period. If your CPA or previous bookkeeper has closed your books and you don't have the password be sure to ask them for it if you ever change services because these are difficult to reset. If you are a client at A Bigger Bottom Line, we'll save this password to your client portal Vault for safe keeping.

Print Out Your Accounting Reports Even though all your files are digital, it’s still recommended that you print out your yearend final reports and supporting statements at the end of the year. QuickBooks can easily generate these files for you, by choosing the information that you find most useful. If you have a service with A Bigger Bottom Line, then we will put all your year-end reporting in your client portal (#Documents) for easy retrieval. Yearend reports are usually generated in February after all 1099 reports are done and January reconciliations are completed. If you have cross period statements like credit cards that don't close until mid way through January, your yearend books should not be closed until these January statements are reconciled. Your profit and loss statements, as well as the balance sheet, are the most important financial reports to print out for your records. Also, it is good to have a printed copy in case you stop paying for QuickBooks service or lose access. Apart from these, you can also use the AR and AP aging report, stockholder details (equity transactions report) or all of your quarterly payroll statements. It all depends on the type of business you’re running. In all cases, keep your data entry up to date and work with your accountant to identify which other accounting reports you should save.

This list may sound daunting, but QuickBooks & working with your Bookkeeper make it very easy. A Bigger Bottom Line also has packages available to help with your month-end close and year-end close using QuickBooks. Book a meeting if you need assistance!





About Andria Radmacher & A Bigger Bottom Line Our head QuickBooks guru, advisor, & trainer, Andria Radmacher, is Founder and CEO of A Bigger Bottom Line. Her team of experts offers several QuickBooks-oriented services including consulting, training, management, integration, and more. Over the years, A Bigger Bottom Line has helped thousands of customers across many different industries with their QuickBooks accounting software, business advisory, and bookkeeping needs. They are experts in 3rd party software applications that connect to QuickBooks online and in helping business owners manage all parts of their financials remotely in the cloud and in their offices.

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