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If you are doing your own bookkeeping in Quickbooks Online, it is important to ensure you are regularly reconciling & reviewing your reports to ensure that everything appears accurate. This allows you to feel 100% confident when it comes time to use those numbers to prepare your annual income tax return.

Today, I've put together some of my favorite bookkeeping year end review tips for you to follow before you hand off those bookkeeping reports to your tax preparer. Think of it like an annual bookkeeping check-up appointment! It shouldn't take more than 15 minutes, but it could save you from making costly mistakes by reporting errors on your income tax return!

These are items I like to review as part of my application process, so if you want this done for you, then schedule a call with me today!

Review Your Balance Sheet

A quick look at your balance sheet can help you determine if there are errors right off the bat. Are your bank account and credit card balances accurate? If the balances are off, it’s a sign that transactions are either missing or duplicated. We’ll cover this a little more in the next point.

As a general rule, there shouldn’t be any negative amounts under your asset or liability sections, and there shouldn't be any accounts listed there are that are personal accounts or accounts that are no longer being used.

Ensure all the liabilities that are listed reflect accurate balances that your business actually owes. You can learn more about what should (or shouldn't) be on your balance sheet by reading this post.

Review Your Reconciliation Screen

Part of your regular monthly bookkeeping process should include reconciling your bank, credit card, and payment processor accounts. I have taken a look at several existing Quickbooks accounts where the owner has been completing the reconciliation process, however they have been ignoring old transactions that are still appearing in the reconciliation screen. By having these uncleared transactions still showing up tells me that these were duplicate transactions that are potentially overstating their expenses.

To learn how to do these reconciliations yourself, you can check out this post.

When reconciling your accounts, you need you ensure that anything that is still “outstanding” is still actually outstanding. Really, the only items that may be outstanding at the end of a statement period is a check that you’ve written that hasn’t been deposited yet. Another exception can be a credit card payment that was maybe pulled from your bank account on the 31st, but didn’t actually get applied to your credit card balance until the 1st. Simple timing differences like this are common, and are not really something that need to be looked into further.

Review Your Income Statement

The third item you should review for accuracy is your Income Statement. More specifically, make sure that all the items on there BELONG on there. Here are a few items that I often see on an income statement that should really belong on the balance sheet instead:

1. Sales Tax Collected being included in the Income section
2. Sales Tax Paid being listed as an Expense
3. Owner's Salary being listed as an expense for an LLC or Sole Proprietor (who hasn't elected to be taxed as an S Corp).

Another relatively quick check is to compare your Income section (Gross sales, discounts, refunds, shipping income) to your point of sale system – do these numbers match? They should! (And a quick hint…if you're recording your payouts as your “Sales” number, it won't match! Learn why by reading this post)

These Year End Review Tips Will Help Ensure Your Bookkeeping & Taxes are Accurate

If you're relying on a year-end scramble to pull all your numbers together, you risk the chance of incomplete & inaccurate numbers. Having your bookkeeping organized all year 'round helps eliminate that tax-time panic, and allows you to actually REST after the holiday craziness that consumes the retail industry.

If you're dreading another year-end scramble, then learn how to keep up with your bookkeeping all year long by joining Bookkeeping Made Simple for Boutiques.