Wrapping Up the Year - What Bookkeepers Need To Know At Year End

podcast Jan 08, 2023



Happy 2023, friends!

As bookkeepers, the end of the year can be a busy time—in fact, it’s the busiest time for me. It’s the part of the year when I have to be the most hands-on, because it’s right around this time when I start doing my year-end review for my clients.

If you’ve never done a year-end review—or you didn’t even know that it was something you should be doing—don’t worry! It’s not too late to get it done. There are some factors that would have been more ideal to tackle in December, but there’s still time.

If you don’t know what a year-end review entails, good news: I have a fantastic resource available to you. You’re going to want to get into the workshop that Karen Bahn and I hosted live last month.

If you don’t know Karen Bahn, she’s basically a go-to tax expert. I also have tax experience, being a CPA, so I understand tax better than your average bookkeeper, but the truth is that I know enough about tax to know that I don't love it. Because I don’t love it, I have blind spots. I spend a lot of my time raising my kids and running my bookkeeping business, and I simply don't have the amount of time that it would take to stay up-to-date on all of the ever-changing tax rules.

Because I’m aware of my own shortcomings with tax, and because the year-end review that we do is really for tax purposes, I wanted to bring Karen into the conversation. Karen is actually my CPA. She does my taxes, and she’s truly one of the most brilliant and ethical tax minds I've ever known.

Together, we have some great tools for you available in this workshop. And even though it aired live last month, it's not too late to get in. If you want to purchase, you can go straight here and purchase access to the replay right now.

If you purchase, you won’t only get access to the workshop; you’ll also receive access to four templates and guides in there that are really useful for year-end review—not just for this year, but for all the years to come.

We cover a ton of ground. We have a deep conversation about what we're covering in the year-end review, why we're reviewing, how to review for it, how to communicate things, how to think about things and remember things, etcetera.

You might be thinking that you’re too far along for this—or maybe that you’re too new. I want to tell you that isn’t the case. No matter what, you are not too advanced for this, and you're not too new for this conversation. If you are advanced in your year-end review, you're going to get a new conversation about the stuff that you already know, and you’ll walk away with a new perspective or some different idea of keeping track of things, plus the templates and guides available. Let me tell you what you’ll find included in this workshop…



What’s Included in the Year-End Review

One thing you’ll receive in this year-end review workshop is this template that will help you dash through your tasks and get yourself organized. It’ll help you keep track of what you've already done and what you have left to do. And then remember, because the idea is that these clients are going to stay with you for several years, you can clone this document and refer back to it for the next year-end review. You can also listen to the replay as many times as you need.

If you care to do a good job and not just the bare-bones basics, you want this. If you want a deeper understanding of what bookkeeping is and how it matches up with tax, you want this. It's a great workshop.

So on a content level, what we covered are the five things to include in your year-end review, and if any of these are unclear to you, it's a reminder that you want to get this workshop.


1. Closing Out Contributions and Distributions

Step one of the year-end review is something that should technically be done on the first of the year, but I tend to review this at the end of the year, and that’s closing out the prior year’s contributions and distributions for the owner of the business. (This workshop is viewing year-end review through the lens of your client being a solo owner, but we talk about the little caveats that will exist if there are multiple members too, just in case.)

The contributions and distributions need to be closed from those accounts and into retained earnings. It's a journal entry. There are some caveats that we cover, and one of the cool things is that this year I created a really great cheat sheet where you can literally drag and drop the numbers and it will populate the journal entry for you, so you can bash through reviewing quickly if you need to book a journal entry.


2. 1099 Requirements

The second step of the year-end review is reviewing 1099 requirements. We cover what those requirements are, we cover ways to remember the tiny little nuanced rules so that it actually makes a bit of sense and you have access to a flow chart that will help you think through this. One of the things that we talk about is how to help our clients have fewer 1099 requirements so it’s not so complex, and then we get into whether we need to get W-9s.



3. Reviewing Payroll

The third step of the year-end review is reviewing payroll, and I break that apart into two sections: the things that you need to review in December, and the things that you need to review in January. I show a little bit of the actual report and we talk through what happens when things aren't perfect, because truthfully, they never are. I say that a lot. I hope you have a healthy expectation that in bookkeeping, things are not always going to be perfect.


4. Balance Sheet Tie-In

Step four of the year-end review is when we start considering whether or not we need to be tying into the balance sheet.

So 12/31 of the prior year on your balance sheet in the books should, in a lot of cases, tie to the tax returns balance sheet. In the workshop, we talk about how deeply you need to do that. Sometimes it might deviate into territory where your CPA should be handling that instead.


5. Balance Sheet Review

Step five of the year-end review is doing a balance sheet and P&L review once your whole year has been completely done and reconciled. That’s going to happen in January, for the most part. You're going to finalize your books, you're going to categorize everything, you're going to reconcile everything to the statements like you should be doing every month, you're going to ensure that those reconciliations aren't showing anything, and then you're going to do a review of the balance sheet. You're going to look at things like debt and principle and interest breakouts. You're going to have to open up conversations with the CPA if you need to about certain miscellaneous things, and we talk about how to do that.



It's Not Too Late!

So if you didn't come to the workshop live, I want you to know that while being live is always preferred, the replay is there, the content is great, and you can dive in right now. You're not too early, you're not too late, you're not too advanced, you're not too new. This is a very important conversation to have with two CPAs with tax experience.

These five things we cover are what it takes to go to bed at night and not have one eye open thinking, “What am I missing?” We all feel that way. I feel that way still. And this is the best way to get rid of that feeling and know in your very core that you did the best and most thorough job for your clients that you could.

To purchase access to the Year-End Workshop replay, visit https://www.katieferro.com/coaching and scroll down to the Workshop Collection.

If you're looking for more tips for bookkeeping, insight on how to become a bookkeeper, and how to say hello to a more confident business model, enroll in Become A Bookkeeper (BABs). 

To learn about the program and get a peek behind the curtain, head to www.katieferro.com/6-secrets.

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