The Year-End Review: Get Your Books in Order Before Year-End

As the year winds down, it’s the perfect time to take a close look at your financial records and ensure everything is in order. Properly organized books not only set the stage for a stress-free tax season but also provide insights to guide your business into the new year. For construction clients, accurate Work in Progress (WIP) reporting is particularly critical. Let’s dive into some key steps to help you close out the year with confidence.

---

1. Organize Your Expenses

Sorting through receipts, invoices, and expense reports can seem daunting, but it’s an essential step to maintain accurate financial records. Here’s how to make the process smoother:

• Go Digital: Use software like QuickBooks Online to scan and categorize receipts.
• Review Transactions: Reconcile all bank and credit card statements to ensure every expense is accounted for.
• Separate Personal and Business Expenses: Avoid confusion by keeping these categories distinct.

By organizing your expenses now, you’ll reduce the chances of missing deductible items and ensure you’re prepared for tax season.

---

2. Review Key Financial Reports

Regularly reviewing financial reports gives you a snapshot of your business’s performance and helps identify areas needing attention. Focus on these reports:

• Profit and Loss Statement: Review revenue, expenses, and overall profitability.
• Balance Sheet: Ensure assets, liabilities, and equity are properly recorded.
• Cash Flow Statement: Confirm that cash inflows and outflows are balanced and sustainable.

Take time to correct any discrepancies or missing data now to avoid headaches during tax season.

---

3. Plan for Tax Season

Proactively preparing for tax season will save you time and stress.

• Update Employee and Contractor Information: Confirm that W-2 and 1099 forms are ready for distribution.
• Maximize Deductions: Review expenses like vehicle use, home office costs, and equipment purchases for potential tax benefits.
• Schedule a CPA Consultation: A professional review can catch anything you might have missed.

Staying ahead of tax season ensures smoother filing and helps you take full advantage of available deductions and credits.

---

4. Focus on Accurate WIP Reporting (For Construction Clients)

For construction businesses, Work in Progress (WIP) reporting is critical to understanding project profitability and financial health.

• Track Costs Accurately: Ensure all labor, materials, and overhead costs are assigned to the correct projects.
• Review Progress Billings: Compare what’s been billed to what’s been earned to avoid overbilling or underbilling.
• Reconcile WIP to the General Ledger: Regularly review WIP reports to ensure they align with your financial statements.

Accurate WIP reporting not only helps with year-end reporting but also provides essential insights for project management and decision-making.

---

5. Set Goals for the New Year

With your books in order, take this opportunity to plan for the year ahead. Use your year-end financial data to:

• Set Revenue and Expense Goals: Define targets for growth while keeping costs under control.
• Evaluate Profitability by Project: Identify which types of projects are most profitable and focus on those.
• Plan Investments: Decide whether it’s the right time to upgrade equipment, expand your team, or invest in new technology.

---

Conclusion

Getting your books in order before year-end might take some effort, but the rewards are well worth it. Accurate financial records not only ensure compliance with tax regulations but also provide valuable insights for better decision-making. For construction clients, ensuring accurate WIP reporting is a game-changer that can elevate project management and profitability.

Start now, and you’ll thank yourself when tax season arrives—and when you step into the new year with a clear financial picture and a strong plan for success.

Need help with year-end bookkeeping? Contact us at 24hr Bookkeeper. We’re here to help you organize your books, review reports, and prepare for a smooth transition into the new year!