Do the words "year-end" overwhelm you? Do your stress levels sky rocket?
This doesn't have to be the case.
Whether December is your fiscal year end or not, December is a busy time - so it pays to start early. With some early preparation now, you can make your year-end completely manageable - almost enjoyable!
Start with these simple steps to de-stress your year end:
Financial Accounting
Step one is ensuring that your financial records are up to date. On the simplest level, you must ensure your records are complete and your banks are reconciled. Ensure all invoicing is up to date and all expenses are in. Once your records are current you need to perform a detailed review of your accounts. By performing this detailed G/L review in October, you will uncover & correct any errors and discrepancies now vs. having to manage that at year end.
Some of the detailed reconciliations that will need to be performed are your prepaid expenses, capital asset/amortization schedules, loan schedules, & tax account reconciliation. Spending time now on collecting your overdue Accounts Receivable before your clients are also bogged down in the holiday rush will allow you to determine if any write downs required. You will also need to spend some time reviewing your inventory to determine any potential write downs required.
Tip: By setting up a monthly financial working paper/reporting package, you will be reconciling these accounts monthly, leaving minimal work to do at year end. This package should be prepared as part of your monthly financial reporting process. Having this work done regularly will have the added bonus of saving you heaps of time at year end and savings off your year-end accounting bills.
Also - don't forget to back-up your files! The last thing you need is a computer glitch or Ransom wear holding you hostage without having proper disaster recovery in place.
Human Resources & Payroll Scheduling
Proper holiday planning is the success to keeping the holiday season enjoyable.
Follow these simple steps to ensure the entire team can keep in the festive spirit while maintaining full client service and uninterrupted operations.
Do you keep your office open during the holidays?
If so, it is critical to start your resourced scheduling for the holidays. Start with ensuring your vacation schedules are up to date. Next, send out an email to the entire team asking for vacation requests. Attach a vacation request form with the email and ensure you put a hard deadline for requests to be back in to HR.
Once all of the requests are in you can create a holiday schedule and approve requests accordingly. This will ensure that you have all aspects of the business operations covered. You won't be left short staffed and panicking in December wondering how deadlines & customer service levels will be maintained.
This will also flush out if there are any discrepancies in vacation entitlement between the employees and the payroll records leaving plenty of time to resolve the issues.
Trust me - your team will really appreciate the jump start on this planning as well as many of us tend to feel overwhelmed during the rush of the holiday season.
Do you have an office shut down over the holidays?
If you close your office during the holiday season, October is the time to send out a reminder to all staff. Again, ensure your vacation schedule is updated prior to sending out this notification with a vacation request form attached as per above.
You will also need to send out a reminder to your clients, suppliers, & relevant stakeholders to remind them of the closure to ensure they are aware of the key dates relevant to their operations. i.e. cut off date for PO receipt to ensure delivery/completion prior to year-end etc.
The sooner you do this the better, with a recommended reminder going out in Oct, Nov and Dec. Communication is the key to all successful businesses.
Holiday Payroll/Accounts Payable
Once you have determined who is working when, you can plan out the holiday payroll cycle. You can determine who will do what and when. Most systems are cloud based and can be programmed to run ahead of time to ease the stress. You also must ensure that you will have enough cash in the bank and ensure any bank transfers are set up ahead of time to avoid the stress of the last-minute call for cash! The same holds true for your holiday Accounts Payable run.
Year-End Staff Bonuses
One last item to be aware of is whether you have any contractual liabilities to pay out bonuses at the year end. Ensure you know who and what is payable, and that your cash flow forecast reflects these commitments. Also make sure this is communicated to the payroll department - don't keep your information in a silo!
Reporting Requirements
The third key area to get some visibility into is your reporting requirements. You need to review your external reporting & internal reporting requirements and ensure that you have met your current & upcoming commitments. There are statutory reporting requirements such as GST, PST, Worksafe, tax instalments, Tax/information returns - T1, T2, T3, T4, T5, US Based returns, etc.
There are legal reporting requirements such as annual returns, dividend declarations & resolutions.
A very important requirement that has to be reviewed are any financing obligations. Have all the covenants been met and reports filed as required? Many of these will be due once your year-end statements are complete so be sure you are aware of those dates and you have the capacity to complete on time. You should reach out to your year-end accountant to ensure your work will be completed in time to meet your financing reporting deadlines.
Tip: If you don't have one already, a monthly reporting calendar is a useful tool to capture all important dates to ensure all deadlines met. This will avoid potential unnecessary late filing fees, interest and penalties as well as provide for capacity planning. In addition to the above you would also capture deadlines such as your tax instalments, contract renewals, lease renewals, permits, licenses, subscriptions etc.
Linking these to your cash flow forecast/budget is a very powerful tool as well.
Tax
The dreaded T Word. We can't forget about tax.
October is a great time to reach out to your tax accountant to inquire if there are any tax issues or changes to the tax laws that you need to be aware of. Be prepared to discuss your personal tax position as well as they are likely linked given you are probably on a dividend compensation structure.
You should prepare a year-end projection to determine your estimated net income.
This will allow you to:
1-calculate your estimated tax liability. You can reconcile this against your installments made to date in the event to ensure you have enough cash flow come March 2018 – in the event you have an additional tax obligation.
2-determine whether it makes sense to do any year end spending to maximize deductions, ultimately reducing tax paid. The ultimate goal!
Also, be sure our tax accounts are reconciled - your installments per your financial records should agree to the figure CRA has on hand.
You may not be able to tackle all of the suggestions, but even a few will help. Pick and choose the ones that resonate the most with you and start delegating! The preparation now will go a long way in December.
Once you have your results & planning complete, you will be able to take the time to review your year, see what worked, what didn't, and start your visioning for 2018.
Update your budget, financial & strategic plans, and cash flow forecasts.
Get excited about the new year and what it brings for your organization and your team.
Relax & enjoy the holidays knowing your operations are taken care of.
If you would like to discuss any of this further, or need some experienced support to help with this process, please call me – 604-202-7085 or fill in the contact form. I look forward to hearing from you!
Susan Devlin, CPA, CA