It’s mid-September and most of us are finally back in full swing after a summer full of, well… summer. We’re looking forward to the autumn leaves, cooler temperatures, and Thanksgiving. Most of us aren’t thinking about Q4, year-end close, and tax season.
Thinking that it’s too soon? Here’s a quick list of things you can start now to reduce the stress of year-end and start 2020 with confidence.
Categorize your income
Income categories are all the ways you make money in your business. They may include sales for each type of product you sell, different consulting services you offer, and even classes you’ve taught. The more detailed you are in categorizing your income, the easier it will be to make decisions on where to focus your efforts next year.
Account for your expenses
Some expenses are tax deductible which means you could get money back, but often only when you have the proper documentation. Like with your income categories, the more detailed you are when tracking your spending, the more information can rely on when making future purchasing decisions. You’ll also want to make sure you have everything properly coded, so you’ll be ready come tax time.
Reconcile your accounts
Why wait until the end of the year when everything seems to come at you at once? When you’re wondering how it’s Christmas already, your bookkeeping is probably not at the top of your to-do list. Now is the perfect time to get into the habit of monthly reconciliations. You’ll want to reconcile your bank and credit card accounts, as well as any additional asset, liability, and equity accounts. It’s important to compare your internal records against your monthly statements from external sources. Even the best banks make mistakes.
Review your profit and loss
If your revenues are greater than your expenses, your P&L statement will show a net profit. Otherwise, a net loss is shown. If it looks like your expenses will exceed your income this year, you can use that net loss for tax purposes. If your profits look like they will be higher, you might consider a major purchase that can be depreciated to offset the win on your taxes.
Clean up your aging report
Now is the time to collect on your outstanding invoices in accounts receivable. Your customers will have other things to worry about come year-end. You can work backwards from the oldest invoices and work to obtain immediate payment.
Verify your 1099 information
If you’ve paid more than $600.00 to a company (or individual) that is not on your payroll, you may need to issue them a 1099. If you don’t have complete information from each vendor or contractor, request a completed Form W-9 so they can provide you with their Taxpayer Identification Number (TIN), which you’ll need to complete the 1099.
If you have outstanding payables, have a plan to pay your vendors in full by year end. They likely need to issue you your very own 1099.
The deadline to send Form 1099-MISC for most payments made in 2019 is January 31, 2020.
Review your payroll system
Confirm that you have accurate and complete information for all 2019 current and former employees. This includes each employee’s full legal name, Social Security number, and current address. Make sure all paychecks from the year are correctly recorded, including commission and bonus payments. You will need to provide Form W-2 to each employee by January 31, 2020. You’ll also need to file a W-2 for each employee with the Social Security Administration, and possibly even to state and local governments.
Don’t want to do it by yourself? I’m happy to say – HireEffect™ has your back! Give us a call before Q4 is over and we’ll help you sort it all out.