3 Year-End Best Practices for Bookkeepersby
For many people, December is a month focused on holidays, family, friends and parties...not learning about best practices. That isn’t necessarily true for the accountant, bookkeeper or CPA, however.
The end-of-year closing of the books is fast approaching, and our time, as accounting professionals, is becoming increasingly scarce. Maybe there are things we want to review again in our clients' books or some items that still need attention. And if you're involved in preparing taxes on top of other duties, your schedule is only going to get more packed as tax season settles in and deadlines dominate your life.
Business owners and entrepreneurs trust us to ensure their financials are accurate, complete and timely so they can set out to properly accomplish their goals. As we all know, a good, reliable set of books does not appear automatically. Rather, producing it takes skill and care through the year.
Warren Buffet said, “Someone's sitting in the shade today because someone planted a tree a long time ago.” If we ever want to “sit in the shade,” we are going to have to start planting trees. In short, accountants need to have a plan.
Here are three practical tips that will help you prepare for a smooth December, minimal stress in January and, above all, happy clients.
1. Make a Checklist
When I began developing an outsourced accounting arm at our firm, I gave a great deal of thought as to how we could consistently deliver a product to our customers that had value and was reliable. It was overwhelming at first, since there were so many details that could easily get overlooked. Plus, I had to keep our entire team on the same page and working towards the same goal.
To accomplish all of this, I started by creating checklists. Atul Gawande, a surgeon, wrote a great book called The Checklist Manifesto: How to Get Things Right. In it, he says, “Good checklists .... are precise. They are efficient, to the point, and easy to use even in the most difficult situations. They do not try to spell out everything–a checklist cannot fly a plane. Instead, they provide reminders of only the most critical and important steps–the ones that even the highly skilled professional using them could miss. Good checklists are, above all, practical.”
Creating monthly and end-of-year checklists will help you make sure each of your clients is receiving the attention they deserve. It will also help your team have a clear understanding of what needs to be accomplished so everyone can sleep a little better at night.
2. Reconcile and Analyze
If you really take your time and reconcile November well, you will spend far less time on December’s reconciliation. Make sure you review, in detail, the reconciliation report and resolve any unknown or outstanding transactions. Double check the accuracy of all bank and loan balances against their statements, and make any necessary journal entries or adjustments.
Another beneficial action to take in November is to review profit and loss statements and balance sheets. This is when we want to find transactions that have been categorized incorrectly or balances that don’t seem right and could use an adjustment. Resolving these issues in December will allow you to better plan with your client and lead to a less stressful January.
3. Consult with Your Clients
Clients generally don’t like surprises, especially when it comes to their finances or taxes. And whether you offer tax services or not, they need a correct set of books, since all of them will eventually need tax returns prepared.
After completing reconciliations for November, it’s important to meet with each client for an end-of-year strategy session. This is when you should discuss tax projections and business trends and whether any decisions need to be made by the end of December. It is always amazing to me how much we learn from clients in this meeting and how much value we can add. This is the kind of meeting that says, “We care about you. We care about your business. We are here to help you make important decisions, and we want to alleviate your struggles.”
If you want to build a lasting relationship with your clients, invest your time in helping them plan for the end of the year before it happens. This is the kind of investment that will always pay big dividends.
As Benjamin Franklin once said, “Don’t put off until tomorrow what you can do today.” Putting in a bit of effort now, before the end of the year comes, will make you and your clients more successful and that, for me, is why I do what I do.
I love bringing tax and accounting expertise to small businesses, simplifying their lives andproviding them with tax and advisory services. I work hard to leverage technology in a way that automates menial tasks, provides accurate up to date information, and empowers people.