A Good Business Accountant: 6 Month End Tips
Just as you perform the daily and weekly accounting functions for your business, you also need to cope up with the monthly or end of month accounting functions in order to keep your accounting system (and your business) in good shape and well-organized.
Here are 6 things you need to do at the end of each month.
Balancing the checkbook is the same way you reconcile your personal checking account. Review the business transactions and make sure that they are accurate so that you have the correct figures and status of your cash position. It will help you discover any errors that may have been committed by the bank or by you. If you take a long time to report them, they will be harder to fix.
The aged receivables need to be reviewed. Check how many days the bill has been past due. Get the outstanding payables for each customer and send out reminder statements to those who owe the business some money. At the end of the year, check the receivables again and see which needs to be sent to collection agencies or to be written off for deduction.
Check the status of your inventory to reorder products that are quick-selling and identify items that are slow-moving and may have to be disposed by giving a discount or eventually, written off. Inventory management is crucial, regularly check and analyze by comparing it with previous months so that it becomes easier and quicker for you to adjust reordering and keeping these items so that the warehouse is not overloaded with slow-moving items or short of fast-moving ones.
Usually, payroll and salary payment are scheduled on the 15th or end of month. Process the payroll and payment according to the schedule and meet the payroll tax requirements according to the local, state, and federal laws. Take note of withholding, reporting, and depositing the necessary income taxes as well as Medicare, social security to respective banks and agencies before their specified dates of payment or deposit.
At the end of the month, review your income statement or the P&L (profit & loss) statement which shows how much you have earned during the month and compare it with previous months and even with last year’s reports. With these information, determine a budget per month or per quarter. Keeping a record of all your revenues and expenses shows you where you have overspent and allows you to make some changes to your spending habits.
Balance Sheet: Review the current month-end and compare with previous month’s so that you get a picture of how you have managed your assets and liabilities. Which of them are significant and understand how you can better manage them. If you have a high amount of accounts receivables, it is time to reflect how you can improve your collection procedure.
While there are daily, weekly, and monthly accounting functions, there are also for quarterly and yearly. All these are necessary to ensure the smooth flow of your business’ assets and liabilities as well as comply with the accounting regulations and its requirements.
Empire Tax Professionals, Inc. 5 Pennsylvania Plaza #2325, New York, NY 10001 (212) 300-5776