Business Accounting: 21 Vital Tasks
Taking care of business finances can be complicated, but proper management can cut down on much of the drudgery. The key actions are to create a realistic budget plan, correctly record transactions, regularly check your results, and keep good records. You also need to be comfortable with basic financial reports like balance sheets, income statements, and cash flow statements. Here’s a list of 21 tasks that make up a timeline that you can use to keep your business’s finances in order.
Daily Tasks
Check Cash Position
Start your day by checking how much cash you have on hand. You should also know how much you’re going to make, and how much you’re going to pay in the upcoming days.
Weekly Tasks
Record Transactions
Make sure to record all your business’s transactions; this can include billing customers, getting cash from customers, and paying vendors; as well as making sure the money is placed in the proper account. Accounting software programs can help you keep track of your transactions.
Document & File Receipts
Always hold on to copies of your sent invoices, cash receipts, and cash payments. It’s also a good idea to make an alphabetical vendor file, as well as separate files for payroll and bank statements. Keeping all your paper receipts organized will prevent difficulties later. There’s also software that lets you scan paper receipts into a digital file.
Review Unpaid Vendor Bills
Keep track of the vendor bills you need to pay, as well as the billing date, amount due, and the due date of the payment. If you have the money available, some vendors offer discounts for early payment.
Pay Vendors & Sign Checks
Set aside the money that’s going to vendors to avoid late payments and maintain good working relationships with vendors. Always make sure to keep track of the invoices.
Prepare & Send Invoices
Make sure to include the payment terms on your invoices. Most invoices are due in around 30 days. You can use an invoice template to make sure all the invoice details are correct and make sure you get paid on time.
Review Projected Cash Flow
It’s important to properly manage your cash flow, especially for new businesses. Planning out how much money your business will need in the upcoming weeks will help you make sure that you have enough cash to pay your bills and make informed business decisions.
Monthly Tasks
Balance Business Checkbook
You should reconcile your business transaction records every month to make sure there are no errors, either from you or the bank.
Review Past-Due Receivables
Remember to keep track of past-due customer payments, as well as how long they have been past-due. The best time to send past-due notices is the beginning of the month. At the end of the year, you should consult this record to see what receivables should be sent to collections or written off as a deduction.
Analyze Inventory Status
Keep track of which inventory items sell quickly and which items are moving slowly and might need to be marked down or written off. That way you can stay on top of ordering product so that you won’t be short or overloaded.
Process/Review Payroll & Approve Tax Payments
After you have a set employee payment schedule, you also need to meet payroll tax requirements based on local, state, and federal laws. Make sure to report, withhold, and deposit all applicable Medicare, social security, income taxes, and disability taxes. Review your payroll before the money is sent out to make sure everything is correct.
Review Profit & Loss vs. Budget & Prior Years
A profit and loss statement tells you how much money you spent and made in the current month/year. It should be measured against your budget every month and every quarter. Comparing your planned numbers to the actual numbers can help reveal where you need to spend more or less money. Also, if you don’t have a budget prepared, you compare your current yearly profit and loss to the previous year.
Review Month-End Balance Sheet vs. Prior Period
Comparing a balance sheet for one date to a balance sheet from an earlier date can help you get an idea of how you’re managing your assets and liabilities. Look for what has gone up or down significantly and try to identify the cause.
Quarterly Tasks
Prepare/Review Revised Annual P&L Estimate
Evaluate how much money your business is making, as well as if your net assets are going up or down, the difference between revenue and expenses. You’ll also want to identify the cause of those changes, how profits are being spent, finding any trouble spots, and make any adjustments needed to improve your sales and margins.
Review Quarterly Payroll Reports & Make Payments
The IRS and most state governments require a quarterly payroll report. Your payroll service provider will complete and file these reports, but you should still review them to make sure everything is in order.
Review Sales Tax & Make Quarterly Payments
If you operate in a state that has a sales tax, you need to comply with said taxes. The Small Business Administration, or SBA, can help you find out what your tax obligations are.
Compute Estimated Income Taxes & Make Payments
In order to pay income taxes, review your profit and loss statement to see how much your quarterly estimated income tax payment is.
Annual Tasks
Review Past-Due Receivables
Check any significantly late payments and decide whether the customer is going to eventually pay or if you need to send the bills to a collection agency or write the losses off as a deductible.
Review Your Inventory
Go over your current inventory and determine the value of your unsold items. A write-down of inventory can be deducted from your year-end taxes. Not writing-down unsellable inventory will overstate your balance and cause you to have to pay extra taxes.
Fill Out IRS Forms W-2 & 1099-MISC
The IRS deadline for reporting the annual earnings of full-time employees (A W-2) as well as independent contractors (A 1099) is January 31. This includes mailing copies of tax forms to your employees. A 1099 is not required for contractors that have earned less than $600. Using an e-file service will help you save time and avoid potential issues.
Review & Approve Full-Year Financial Reports & Tax Returns
When it’s tax time, thoroughly review your full-year financial reports and then send them to your accountant. Before signing your return, make sure it is accurate based on your financial reports. If an IRS audit discovered any underpayment of taxes, the unpaid money will come out of your pocket. Accounting software can help you generate financial reports and manage taxes.