End of Year Planning – How to Stay Audit and Tax Ready

When audit and tax time rolls around, will your financial books be ready to present to the CPA and IRS? Or will you be working overtime with your bookkeeper, scrambling to enter your business’s year-end financials into QuickBooks and close out the fiscal year?

With today’s business processing technology and accounting system design capabilities, even the smallest business can be audit and tax ready when the New Year’s countdown begins. Closing out financials in December should be no different than any other month of the year, as long as the right systems are in place to automate and integrate your accounting function all year long.

Outsourcing to Stay Ready

Outsourcing your accounting throughout the year is one of the best ways for a small business to be prepared for the end-of-the-year crunch. Instead of relying on the experience and availability of a single bookkeeper, an outsourced accounting service provides an entire dedicated team of professionals who are experts in small business accounting compliance.

The team typically consists of an accounting manager, staff accountant, and a bookkeeper at the fraction of the cost of a full-time accounting department

Here are the benefits of using an outsourced accounting team over a local bookkeeping service in keeping your accounting audit and tax ready:

1. Reliable, Accurate Financial Results

Your business has a dedicated team to process your transactions and perform daily, weekly and monthly accounting services with a second set of eyes on every financial report. In addition, because you have an entire team, you never have to worry that your accounting will suffer due to employee turnover, vacation, sick leave, maternity/paternity or other paid time off. 

2. Accounting Expertise on Demand

With a dedicated team, trained, staff accountants implement accounting tasks, working side-by-side with experienced accounting managers. As a team, they get to know your business and bring a level of accounting best practices and knowledge not typically available through a bookkeeping service.

3. QuickBooks^® Systems Design and Integration

The best QuickBooks outsourced accounting specialists are those with the Certified Intuit ProAdvisors designation. These QuickBooks experts have in-depth experience using third-party, business process applications that integrate with QuickBooks. They are wizards at customizing and optimizing QuickBooks files, and setting-up accounting systems that automate and integrate financial data - all with little or no manual entry.

Processes that can be integrated with QuickBooks include bill payment, time tracking, payroll, expense management, billing and collections. These operational efficiencies supply more accurate, reliable and timely financial intelligence daily, monthly and at year-end.

4. Advanced Decision-Ready Financial Reports

When your business is audit and tax ready at any point in the business year, your business, in turn, will be decision-ready. An outsourced accounting service can supply management accounting reports utilizing key performance indicators and company scorecards, customized to track and measure your business goals. With these reports, a business owner is able to make informed, data-driven decisions in real time. 

Do It Yourself Year-End Checklist

On the other hand, if you have been doing your own accounting, or using a bookkeeper, QuickBooks has a handy year-end guide to help you survive the year-end accounting process. The checklist shows the accounting tasks to follow to wrap up this business year, archive files and prepare for the next business year. The guide is broken down into three sections:

• Tasks to prepare for filing taxes
• Tasks to do if you use subcontractors
• Tasks to do if you have employees

Tasks to prepare for filing taxes

1. Reconcile all bank and credit card accounts
2. Verify petty cash entries for tax year
3. Make year-end accrual adjustments and corrections
4. Close the books
5. Adjust retained earnings
6. Review details of new equipment purchased in year
7. Make asset depreciation entries and adjustments
8. Review fringe benefits that need to be reported on W-2
9. Take a physical inventory and reconcile with book with inventory
10. Print financial reports
11. Print income tax reports to verify tax tracking
12. Import tax-related data to Turbo Tax or Intuit's ProConnect ProSeries
13. Print and mail W-2, W-3, 1099, 940, 941 and 1096 forms by February 1
14. Archive and back up QuickBooks files
15. Order supplies and tax forms

Tasks to do if you use subcontractors

1. Check 1099 information for accuracy
2. Print and mail 1099s by February 1

Tasks to do if you have employees

When you have employees, the next step depends on whether you use QuickBooks assisted payroll, another payroll service, like Insperity^® Payroll, or no payroll service.

With QuickBooks assisted payroll (and Insperity Payroll), the service handles:

• Pays payroll taxes and other liabilities
• Print and distribute W-2s
• Print and distribute W-3s
• Process 940 and 941 form

Using QuickBooks with no payroll service, you must handle the employee compliance steps yourself along with the additional steps listed below.

1. Confirm that you have the current payroll tax tables
2. Clear year-to-date payroll amounts on QuickBooks
3. Follow same steps as with assisted payroll:

• Pay payroll taxes and other liabilities
• Print and distribute W-2s
• Print and distribute W-3s
• Process 940 and 941 forms

4. Verify W-4 information

Get Ready to Save

Being audit and tax ready 12 months a year not only provides peace of mind for a business owner, it can also save you money. When you have confidence in the accuracy of your financial information, you can provide it to your CPA on a timely basis at year end. Accordingly, this enables your CPA to spend less time checking on the reliability of your numbers.

They can then focus on the audit and tax preparation process which is what you are paying them for in the first place. Correspondingly, less billable hours by your CPA translates to less cost for your business.

GrowthForce provides outsourced bookkeeping, accounting and controller services that keep our clients tax ready, audit ready and advisory ready – 12 months of the year.

Our U.S. Based teams provide a fractional share of a full service accounting department and leverage QuickBooks Centric technology to automate and integrate your back office systems, all designed to deliver the financial intelligence you need to strategically grow your business.