3 Reasons You Should Clean up Your Books Before the Holiday Season
Bookkeeping can be a tedious task, especially for small business owners. But it is important to clean up your books before the holiday season so that you can focus on your business, family, and friends.
Many business owners are faced with the dilemma of whether to do their bookkeeping before or after the holidays. This article will give you some reasons why it is better to do your bookkeeping BEFORE the holidays.
Holidays can be a time when you want to forget about all things related to work and focus on your family, which is great. But what many people don’t realize is that this is also a time when they can get ahead on work and take care of things that they need to do before January 1st.
Here are three reasons are why it’s important to clean up your books before the holiday season:
- Maximize Tax Deductions
- Review Bookkeeping Errors
- Better Plan For The Holidays
Avoid Potential Problems Going Into The New Year
As you go into 2022, there is going to be a list of tasks that need to be completed. Working towards those goals ahead of time can save you a headache after the holidays and it may be too late to make some big changes as well.
Some areas you may need to consider include:
- Ensure your bank statements and accounting software is reconciled and up to date
- Review your cash flow needs over the holidays
- Update and organize records (important for your 2021 tax return!)
- Attach receipts to expenses in your accounting software
By following through with these tasks ahead of the holidays you get the opportunity to analyze many areas. For example:
Maximize Tax Deductions
Getting the greatest return on your tax is not so much about finding a great accountant to review your prior year, it is more about tax planning and making wise decisions that aid in achieving the highest tax deduction.
This may include looking into charitable contributions for the holidays or determining whether you can afford holiday entertainment without the deduction.
By keeping up to date on your books you are able to analyze this information to make decisions on how to move forward. Resulting in a well planned and maximized tax return.
Review Bookkeeping Errors
Part of closing out your books is making sure they are accurate and free from error. This takes a good amount of time from your accountants and the more rushed they feel during tax season the more susceptible they are to overlook issues. Start early and be consistent to get the greatest quality of care.
This goes for business owners as well. In order to achieve tidy books, accountants will often ask about expenses and situations around different transactions. If your books have not been reconciled in months, it is very likely your accountant will be reaching out regarding an event you long forgot about.
Staying up to date on your books allows you to more accurately assess a situation and problem solve with your accountant how to best move forward.
Better Plan For The Holidays
Whether you are looking to throw a big holiday bash or just want to make sure your cash allows you to purchase enough inventory to get to january 1st, having updated books is going to be essential in this process.
Part of making this happen is looking at your historical data from the year prior. What took place? How did your profit margin stack up against prior periods? Are there adjustments that need to be made?
This can all help you analyze cash flow to determine how your business will be able to handle those inevitable expenses that hit us during the holiday season.
This is going to be especially true for businesses that handle inventory in demand during the holidays. If you sell products that make great holiday gifts or could be considered seasonal, you should be heading into Q4 confident in your bookkeeping with a plan for the future.
Those who handle inventory will have to manage things like cashflow, inventory turnover, spoilage, storage, and influxes in demand. It will certainly be a busy time of the year for you. Don’t let the stress of incomplete books hang over your head.
We know how exciting the fall and holiday season can feel. Upcoming vacations, cozy weather, and the fresh start of a new year can be very distracting. However, proactive planning is what can help turn an overwhelmed business owner into one confident with their decision making.
If you are ready to begin cleaning up your books for 2021, we highly encourage you to learn about our new offering. We are offering 25% off $400/month cleanup with a 12 month bookkeeping contract.
If this sounds like it may be perfect for your business, click the link below to learn more.