Updated: Oct 6
Where you able to receive the Paycheck Protection Program (PPP) loan? Many businesses were not able due to improper record keeping. The COVID-19 pandemic has proven why staying on top of your financial affairs is essential. Managing your finances is more than just creating an invoice or making a deposit into your business account. There are tasks you have to complete to be ready to apply for a loan or when the time comes to provide financial records for an investor.
As we are getting closer to the end of the year, this is the perfect time to gather documents and update your records to complete the 2020-year end accounting tasks. Many times, organizations have to work overtime to finalize their accounting records in January. Don't be that organization! This way of working causes an increase in stress, and simple errors are highly likely. Sure, you might have to pull out that wallet on a certified public account (CPA) or a bookkeeper at some point. But in the meantime, you can learn how to seize the order with these 17 easy to do record-keeping practices.
17 Easy To Do Record-Keeping Practices
Update your accounting records. Ensure that your accounting software is updated by 12/31/2020 with income and expenses.
Reconcile your bank and credit card accounts. This task assures your accounting system matches the bank detail.
Review your financial reports in your accounting system. Standard reports are accounts receivable, accounts payable, profit & loss statements, and balance sheets.
Send out invoices as soon as possible to your customers.
Verify payables (bills owed) are current, or you have a plan to pay down.
Collect W-9 forms for contractor workers early on so that the 1099 form can be sent by the end of January.
Notify staff to update their addresses for W-2.
Keep track of business loans. The PPP loan requires specific documentation to be forgiving. Ensure you understand the requirements.
Understand third-party fees, such as Stripe and PayPal. You should record these fees in a separate account.
Ensure that the staff has submitted all reimbursements by 12/31/2020.
Update or create a cash flow statement. The report will identify if you have enough cash to carry the organization until the end of the year.
Confirm your payroll taxes are current.
Renew any certifications or licenses.
Perform a physical inventory—list date of purchase, vendor, and purchase price.
Create a record-keeping system to store receipts, invoices, bills, payroll reports, and agreements. You can scan documents to Google Drive or Dropbox.
Back up your data! If you cannot afford an IT company to back up your computer, use a cloud option to back up your data.
Find a CPA to perform your taxes.
The year-end accounting process does not have to be stressful. Accounting is a set of tasks to ensure you have accurate financial records. Proper record-keeping is an essential practice to develop because it eliminates gaps in your financial statements. As a result, staying on top of accounting tasks leads to fewer tax preparation issues and the IRS. Do not get caught off guard for 2021!
Challenge: Create a checklist with your accounting tasks and due dates. Take 30 minutes a week to complete the list. Please keep us posted about your progress.
Knowing whether your business or personal finances are healthy is crucial to your overall success and well-being. Linda Diakite Karressy, the owner of Insight Financial Group, makes accounting fun! She isn’t your stereotypical zero-personality accountant who wears the traditional green shade. She loves breaking down accounting to its lowest denominator so that everyone can grasp it. Plus, Linda’s a natural teacher. As a seasoned accounting professional, she understands how to engage adult learners and hold their attention.