End-of-year brings exciting new thoughts for the future, and it also brings some headaches. You will need to organize your financial records into a year-end summary. Creating a year-end summary is much easier if you institute a month-end procedure throughout the year. At the end of the year, you can compile your organization’s reports with less pressure to be accurate and complete.
Devising a month-end procedure is logical and easy to do. You simply need to fill-in the blanks in your records and complete all financial items before you declare a month “closed”.
Below are some easy-to-incorporate items to prepare your month-end records. Make a checklist. Hunker-down and complete the list. Doing this each month will make year-end a piece of red velvet cake with cream cheese icing. Have at it! You may wish to establish a recurring date each month to complete the monthly books. For example, select the 25th of the month or the 28th of a month to do the books each month.
First off --- Get into a routine!
Near the end of each month do the following:
Enter all vendor bills for the month in Quickbooks.
Reconcile payments: Be sure you have entered all customer payments for the month.
Reconcile bank accounts: Include credit cards, checking and savings accounts into Quickbooks.
Reconcile inventory and assets between Quickbooks and your inventory system.
Reconcile other liability or asset accounts you are tracking outside of Quickbooks (deferred rent, accrued expenses, prepaid expenses).
Run financial statements. Run your Profit and Loss statement, Balance Sheet, Statement of Cash Flows (is using accrual accounting) and other reports for the month. Think logically and review that the amounts are reasonable and make changes if needed.
Close the month in Quickbooks. Don’t forget this step. At this point, you will input no more transactions, such as customer invoices or vendor bills. Doing this will keep mistakes from happening when someone accidentally tries to post something after the close date. Quickbooks can require a password before anyone can enter data after the monthly books are closed.
Distribute the financial statements.
Reconciliation and completeness as you go along is much easier to “fix” if you catch it when it happens. This gives you peace of mind knowing your financials are accurate and up-to-date. Keeping your financials accurate from month-to-month. Knowing where you stand with your cash and inventory alleviates some of the concern of staying accurate with your critical balances. At year’s end, you smoothly roll these monthly records into your year-end financial records.
When you have questions about managing your financial statements and keeping month-end records and year-end reports, contact TBFoster Accounting to get your answers. We have ideas to share and solutions to management and organizational questions. Keep in touch with our blog. If you have questions about organizing and closing your books each month or year, let us help. Contact our not-for-profit team leader at trent@tbfosteraccounting.com.
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