Ep: 11 Year end financial checklist
Erica: It's hard to think it's time to start thinking about year end already
Caroline: When you’re a business owner you spend so much time thinking ahead it can often feel as though time is moving at an accelerated rate! But there are just some things that you absolutely can not put off and preparing for tax season is one of them!
Erica: There are so many things to consider and I am going to hit the key points.
If you haven’t started your bookkeeping yet, now is the time. Don’t wait until January - your future self will thank you.
Taking a year end inventory count. Remember - we spoke about this briefly on a previous podcast. This is a PHYSICAL count and this needs to be the cost you paid for the product (so wholesale) and not what you would sale it for (retail)
(Bookkeping terms)
Any year end adjustments that you may have received from your CPA, need to be reported to your bookkeeper. Examples would be damages, lost/stolen, giveaways.
Make sure all your accounts are reconciled through 12/31/23. This would be your bank accounts, credit cards, loans (capital loans and lines of credit) even PayPal.
Reviewing your P&l Detail and Balance sheet and see if you agree where everything is posted to.
Goal setting for 2024 - this is a great time to update your budget as well once you decide your goals.
Gather W9s - This one is a pain point topic. We can not stress enough that you need to gather a W9 before you ever pay someone. Otherwise the vendors may drop off the face of the earth and not receive it. Even if you think they won’t go over $600.00, it can happen. We suggest from the beginning always get one.
Another tip for W9 employees - avoid paying in cash or dancewear because it's difficult to prove that you paid them and they can dispute your amounts and you wouldn’t have a leg to stand on.
1099 NEC to anyone who provides a service to you over $600.00 for 2023. This can include Choreographers, videographers, maintenance, and temp help.
This is one a lot of clients don’t realize at first - 1099 Misc for anyone to whom you paid rent or legal fees too. This is why we as your bookkeeper ask if all your rent is true rent or if there are CAMS or utilities included, because you can only 1099 for TRUE rent.
If you don’t have a CPA now is a great time to interview and find the one that works for you. At Dancebookkeeping.co we have a few CPAs that we refer to, please feel free to reach out if you would like a referral.
Income tax - make sure you are tracking your mileage. You can report actual expenses for your vehicles separately from mileage and your CPA will calculate which route will get you the most write off. Another tip for income tax is home office. Finding out your total utilities, internet and square footage as well as an expense directly for your home office - your CPA can use this as a write off.
Next is payroll:
W3’s and W2’s are due 01/31/2024 for the year 2023. You will want to send your employees their copies, and then you will send a copy along with the W3 to the Social Security Administration
If you have any adjustments to income for employees for 2023, now is the time to make them, and you want to get it done BEFORE completing the following forms:
941 Form – 4th Quarter which is due by 01/31/2024.
940 Form – This is an annual report for all of 2023 and is also due by 01/31/2024.
Unemployment – Report your wages for the 4th quarter.
State Withholding Tax – 4th quarter (if applicable).
Local Withholding Tax – 4th quarter (if applicable).
Next you will want to do the following:
Review and audit your Sales Tax Payable Liability Account. This will tell you if you have over or underpaid on your taxes thus far, and assist you in locating any discrepancies. .
Compliant with all nexus thresholds in other states.
You will also want to ensure that you are up-to-date with all sales tax filings and payments.
This should already be done, but if you have not, you will want to make sure that your POS is set up to collect sales tax correctly based on merchandise, state and local tax regulations.
Lastly, you want to be sure you are up-to-date with any changes in filing frequencies. If this occurred, you would have received letters indicating such from the state.