As the end of the year nears, every business must attend to their 2015 books one last time. Transactions need to be recorded, accounts must be reconciled and outstanding bills have to be settled once and for all. A clean set of books gives you an overview of how your business performed over the past year and positions you for a strong start in the new year. Below are three specific advantages to cleaning up your books before the year ends.
1. Get prepared for tax time
Tax planning is one of the main reason your books need to be cleaned up before the end of the year. It allows your tax accountant to take your current books, add estimated income through the end of the year and arrive at projected taxable income. In some cases, there are financial decisions that you and your tax accountant can make prior to years-end that reduces your taxable income.
Too many businesses push off their clean-up work until their tax deadline approaches. By doing your cleanup work now, you’ll have everything ready to hand off to your tax preparer when the time comes. It will make their life much easier and allows them to focus on maximizing your deductions and putting you in the best possible tax situation.
2. Uncover what worked and what can improve
Your books tell the story of the past year of your business. By diving deep into your records you can come to understand all the areas of your business that made or lost you money throughout the year. Perhaps a specific sales channel outperformed others? Maybe the entirety of a particular expense was more than you budgeted for? Was your COGS appropriately proportionate to your revenue? These are the types of insights you can get from working on your books at the end of the year.
3. Start strong in 2016
Once you understand everything that impacted your business throughout the year, you can use those learnings to improve your operations next year. You can create a thorough budget that will guide you towards a successful 2016. And you’ll have the assurance that you're starting the year with clean and current financial records that you can refer to at anytime.
An updated set of books can provide a wealth of information about your business and prepare you for your tax filing. That being said, doing the clean-up requires a great deal of work.
The good news is BookKeeping Express can help you begin 2016 with accurate and up-to-date books. Sign up for our bookkeeping services before December 31 and get free set-up and 25 percent off clean-up work. Learn more at bookkeepingexpress.com/year-end-special.