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TACKLING YOUR YEAR-END ACCOUNTING

By Frances McGuckin

No doubt many self-employed people are buried under piles of paperwork, trying to make sense of their accounting records for the dreaded year-end tax headache. If you are one of the few extremely organized people, you will only need to prepare some year-end information. If not, then I am talking to you.

Preparing accurate year-end information means making a concise cut-off at year-end. To do this, many areas require attention. If any of this pertinent information is missed or is incorrect, then your financial information and tax payable will be incorrect. Below is a year-end check list.

Inventory: You should have completed an inventory of unsold product or work in progress and valued it at cost. Now is the time to write off the value of obsolete products. It sounds basic, but one client forgot to do it. If you do it now, you must deduct shipments received after December 31st from inventory and put back into inventory the products you sold after December 31st.

Sales: Include all sales invoices shipped and billed for the year to December 31st. If you carry accounts receivable, make a list of outstanding monies by customer. Now is the time to write off uncollectible or bad debts. Give this information to your accountant.

Disbursements: Ensure each cheque written to December 31st is entered into your records. Do not record only the cheques appearing on your December bank statement. The bank should be reconciled and all outstanding cheques listed. If any cheques have not shown on the bank statement for six months or longer, cancel them and reverse them out of your records.

Accounts payable: Make a list of all unpaid vendor accounts dated to December 31st. Either enter them to your records as accounts payable, or give this list to your accountant, detailing the GST and type of expense for each account.

Credit card and cash expenses: Include in your accounts payable your latest unpaid credit card expenses. Record all business expenses charged to your personal credit card during the year. Dig out those cash receipts for lunches, stamps etc. that you paid by cash. Either enter them to your books or give the amounts to your accountant.

Business loans: Ask your bank for an annual loan statement for business, vehicle or other business-related loans, detailing principle and interest payments. Keep this information for your accountant.

Happy paper-shuffling.


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