The month of December is always a blur, but accounting firms are busy at this time of year with year-end accounting. Whether you have a single-person business or a corporation, the end of the year may be the end of your business’ financial year. For businesses, some common tasks include:

1. Reconciliation

Accounting firms should have a standard reconciliation process by which they can ensure that all account balances and activities match the client’s books.

When matching checks or deposits against the client’s bank statements, the client’s records should be the primary source. If you have any questions or concerns, attempt to reconcile the information using the client’s bank.

If you are using the bank reconciliation to construct a trial balance, ensure you know the client’s accrual basis of accounting and their specific method of accounting for each item. This will prevent any mismatches or unexpected differences.

2. Payroll and Payroll Taxes

If you provide payroll services, ensure that you know your client’s payroll period and payroll tax period. Reconcile your client’s payroll and payroll taxes end-of-year with your client. On the other hand, if you provide payroll but only for certain employees, such as executives, confirm whether your client will be completing the payroll for the rest of their employees. If not, ensure that you have the time to complete these tasks.

3. Inventory Check-Up

If you provide inventory services for your clients, ensure that you know the method of accounting for inventory that your client uses and the number of inventory items that you track.

Review your client’s inventory records, reconcile, and value the inventory. Keep in mind that inventory holdings may vary from quarter to quarter and that this variance may be intentional.

4. Year-End Financial Statement and Tax Filing

If a client is required to prepare and file financial statements, ensure that you have a signed engagement letter with them in order to complete the financial statements. If you are not completing statements, ensure that you have a date when you will need the statements so that you can provide a time frame for their completion.

If you are completing financial statements for the client, ensure that the client has approved the financial statements and that you understand the auditor’s scope and work product.

5. Closing Entries

Clients should be aware that if they have necessary entries for their financial statements, they should have these details finalized prior to your final bill.

As an accounting firm, you should confirm with your client’s internal bookkeeping department to ensure that these entries are completed successfully.

Conclusion

As the end of the year approaches, you should know how your clients’ books will need to be closed out. The five tips discussed above are a starting point to ensure a smooth end-of-year bookkeeping process. Knowing how to close your clients’ books using best practices is important as it gives you insights into common mistakes that accountants make during this uncertain time of year. 

Making your firm run as smoothly as possible can be quite a challenge if you don’t have the right tools to use. This is where Firm360 comes into play. We offer an all-in-one platform designed to make your firm’s workflow more manageable and efficient. Book a demo today to learn more about our easy-to-use accounting practice management software.