Don't Wait Until Tax Season to Find Out Your Books Need Attention

Fall is the season when many businesses begin preparing for the upcoming year. It's the time of year for building a budget, setting goals, and thinking about where you want to be in five years. Businesses that set a budget are reviewing what they accomplished this year and deciding what needs to happen next.

If you're reading this and thinking, “That's not me at all,” you're not behind. Yet.

There are many reasons you may not have a budget, a plan, or a list of business goals. Most of us simply want to support our families, and that's an honorable goal. Others would love to minimize their tax burden or avoid being blindsided when tax season rolls around.

If this is you, keep reading.

Here's the thing about planning for the future: you need to understand where you've been before you can decide where you're going. If your bookkeeping isn't current or accurate, how can you confidently build a budget, set goals, or make decisions for the upcoming year? And if you're not thinking about next year's goals just yet, there's still a very good reason to review your books now: tax season.

Because here's what happens to so many business owners at year-end.

When Bookkeeping Takes a Back Seat

At tax time, you may find yourself scrambling when your CPA requests the documents needed to complete your tax filing. You've been busy running the business, making sure it succeeds, and the bookkeeping gets pushed to the back burner. Maybe you've created a nice stack of receipts with every intention of scanning, reviewing, or categorizing them, but life happens. I get it.

This is a common issue among many business owners. You're not the only one, and there's no need to be ashamed. Bookkeepers and CPAs have seen it all. The good news? You don't have to keep doing it this way.

This is where cleanup and catch-up work come in. If your books are behind, you may only need catch-up work, which brings your bookkeeping current when transactions haven't been recorded or reconciled.

Cleanup is different. It addresses problems such as duplicate invoices, missing expenses, incorrect balances, and transactions posted to the wrong year.

Those errors can cost you. Duplicate income can overstate what your business earned, while missed expenses can mean fewer deductions. Both can affect your tax liability if those errors carry through to your tax return. Reconciling and closing out each month helps catch errors in real time and prevents them from accumulating across multiple periods.

Three Situations I've Encountered Recently

I'd like to highlight a few scenarios I've encountered over the past few months.

1. The business got busy.

A business owner handled their books internally, but the business got busy. By tax time, they had a full year of activity to reconcile. We helped them reconcile their bank transactions for the full year, but they paid a premium.

2. The books weren't maintained throughout the year.

Another business owner didn't typically keep books. They added up their expenses and turned them in to their CPA at tax time. They were left with an unexpected tax bill.

3. Everything appeared to be in order.

Our last business owner believed they were doing everything right. They later discovered the bookkeeping was only partially complete. Now their taxes are late, and they will need to find a new bookkeeper and likely pay a premium to get caught up.

No matter which situation sounds familiar, the cost of waiting can be more than just a bookkeeping bill.

Your Books Should Do More Than Prepare You for Taxes

If you want to get more out of your business, see where you're most profitable, where you're overspending, or where you're missing the mark on quoting jobs, you must consistently keep up with your books. Waiting until tax season to organize your revenue and expenses significantly increases the risk of missing deductions.

Tax preparers and CPAs are incredibly busy near deadlines. While some provide ongoing planning and advisory services, tax preparation alone doesn't necessarily include reviewing your business methods or financial activities throughout the year. And if you don't have an experienced bookkeeper or CPA in your corner throughout the year, who is ensuring revenue and expenses are captured properly?

You may be making decisions based on bad data without even realizing it.

Why You Should Start Before December

Now is the perfect time to catch up on your books, clean up errors, review your financial position, and make plans for the upcoming year.

By doing it now instead of December, you give your bookkeeper, CPA, or tax preparer time to review thoroughly and respond thoughtfully. There's still time to discuss potential tax benefits, make informed decisions, and avoid surprises before the year closes.

Catch-up and cleanup work is helpful for service-based businesses, contractors, businesses without internal bookkeeping, and most of all, anyone who hasn't touched their books all year. Gather your paid invoices, outstanding invoices, receipts, and financial statements, and organize your records by date and vendor. Although accounting software is highly beneficial, it's not a necessity for every business.

Doing this now allows you to close out the year with confidence.

Once you have a fresh slate and a routine in place, you're ready to plan, make informed decisions, and have peace of mind.

Cleanup isn't the end of the process; it's the beginning of clarity.

Say Y.E.S. to Year-End Sprint

If you're unsure whether your books are accurate, complete, or ready for year-end, we've created Year-End Sprint, or Y.E.S. We'll assess the state of your books, identify concerns and opportunities, and give you a prioritized list of items to address before year-end.

You won't just receive a checklist. We'll put together a personalized walkthrough, review our findings with you, and answer your questions. You'll also receive a recording to reference as you work through your next steps. You'll have a clearer picture of where things stand and a practical starting point for what comes next.

You don't have to wait until tax season to find out something needs attention.

Say Y.E.S. to Year-End Sprint and give yourself time to do something about it.

Contact Whetstone & Co. to learn more about Year-End Sprint or schedule your assessment.