While most people are focused on 2022 and everything the new year has to offer, those of us in accounting and finance professions are still looking backwards, preparing year-end reporting, compliance documentation, and more.
While 2021 is still fresh in our minds, here are some tasks that business owners should start doing immediately with his or her finance team during the early part of January:
Balance Sheet & Operating Results: A “deep dive” into balance sheet accounts is one specific procedure that every company should be doing before they finalize their 2021 results. Some of you may be saying, “Shouldn’t I be looking at my income statement instead?” The answer is not necessarily. Our experience has taught us that there are often a fair amount of mispostings that have a material impact on financial statements. For example, a review of your accrued expense account may find that expenses that were previously paid should have been recorded as a reduction in accrued expenses and not as an expense on your P&L. This is why it is important to take the time now to develop a recurring procedure to review all significant balance sheet accounts; this will ensure that there have been no mistakes nor omissions made for journalizing your operating results during 2021.
1099 Reporting: The federal government has a January 31st deadline for 1099 reporting. In order to report all contractors that work for you and provide them with a 1099, you need to have a current W-9 form on file. It’s not uncommon to either a) not have this documentation; or b) think about obtaining it a few days prior to the deadline. Penalties can be steep for those who file late. It’s a time-consuming and important task to review all your vendors you paid out during the year to determine whether any of them would require 1099 reporting.
Business-Related Receipts: Make sure you have all receipts related to business expenses. There are occasions where a personal card is used for business expenses and vice versa. By reviewing your credit card and check activities, you’ll ensure that all business expenses are properly reported and deducted on your tax return.
Takeaway: 2021 is not quite over yet for many business owners. In fact, it’s not over until your Fractional CFO signs off. If you have questions regarding procedures you should be doing to ensure that all 2021 reporting is done properly, please feel free to reach out to Brian or Scott at email@example.com.
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