Steps to Take Before the Last Day of the Fiscal Year

Review your profit and loss statements

Your business’ profit and loss statements will help you get a snapshot of its financial performance. What does your revenue look like now that the year is almost through? Do you anticipate any other large expenses to hit your books? If not, evaluate how much money you have available, and see if it might be wise to make a larger purchase before the end of the year so that the item can depreciate.

Verify Your Vendor and Lender Files

It’s important to review the paperwork—including 1099s—associated with any of your vendors, as well as information relating to any current outstanding loans. Make sure all of your vendor 1099 forms are up-to-date and accurate. You also want to make sure the 1099 information has been inputted correctly into your accounting system so that it’ll populate the forms when printed.

Take Inventory

If you sell products, conduct an inventory assessment and compare the results to your last inventory report. Make any necessary adjustments so that you have an accurate account of how much capital you have wrapped up in your current inventory.

Look for Benefits to Report on Your Outgoing W-2

As a business that issues W-2s, these benefits relate to the organization as a whole and can reflect things such as health and life insurance, transportation subsidies, educational reimbursement programs and more.

Create a Budget for the Following Year

It’s never too early to plan. By reviewing your statements from the current year, you’ll start to see a pattern in the things you need to budget and plan for in the next year. By taking stock of your expenditures from the current year, you’ll have a better understanding of where to focus your efforts moving forward.

What is a Single-Member LLC?

A single-member limited liability company (SMLLC) is a limited liability company (LLC) which has one owner. A single-member LLC is a business entity registered in the state where the company does business. The term single-member is a recognition that the LLC has one owner, and that the owners of an LLC are termed "members."

How to Form a Single-Member LLC

To form a single-member LLC, you must go to your state's department of state (business division) to obtain information on the process, including filing Articles of Organization (or a Certificate of Organization in a few states) and paying a filing fee. After filing this state business registration, you should consider also preparing an operating agreement (similar to by-laws for a corporation), to spell out how you will run this business.

How a Single-Member LLC is Taxed

Single-member LLC's are subject to several different kinds of federal and state taxes as a business entity. These taxes are the same as paid by other types of businesses, but the method of payment is different for the SMLLC.

Small business owners often have a running list of things to do. These include deadlines, sales calls, employee issues, banking, advertising – and taxes. The IRS can help with the last one.

Here are seven resources to help small businesses owners with common topics:

• Looking at the Big Picture: The Small Business and Self-Employed Tax Center brings information on IRS.gov to one common place.
• Organizing Tasks: The IRS Tax Calendar for Businesses and Self-Employed helps owners stay organized. It includes tax due dates and actions for each month. Users can subscribe to calendar reminders or import the calendar to their desktop or calendar on their mobile device.
• Searching for Topics: The A-to-Z Index for Business helps people easily find small business topics on IRS.gov.
• Getting Information by Email: Small business owners can sign up for e-News for Small Businesses. The free, electronic service gives subscribers information on deadlines, emerging issues, tips, news and more.
• Watching Videos: The IRS Video Portal offers learning events and informational videos on many business topics.
• Finding Forms: The Small Business Forms and Publications page helps business owners find the documents they need for the type of business they own. It lists tax forms, instructions, desk guides and more.
• Meeting in Person or Online: Small business workshops, seminars and meetings are held throughout the country. They’re sponsored by IRS partners that specialize in federal tax topics. Topics vary from overviews to more specific topics such as retirement plans and recordkeeping.

How does your business assess its financial strength? No doubt you refer to your income statement and your bank account for the basics, but the truth is most businesses ignore the most powerful financial tools in the accounting arsenal: the balance sheet and the cash flow statement.

The bottom line

While the cash flow statement is often considered the most important financial statement for a small business, the three main financial statements are interrelated. Viewing them holistically can help you make smart financial, investment, and management decisions for your business.

Of course, that’s easier said than done, so be open to getting help—whether from an accountant or from free resources such as the expert mentors at SCORE. Getting your arms around your financial data may be the most important thing you do this year.

Hiring a bookkeeper has significant benefits, including:

Minimizing and Catching Potentially Costly Errors

This is the biggie. From data entry mistakes to lost transactions to personal/ business expenses mix-ups, there are myriad ways books can go wrong. A bookkeeper’s expertise means, first of all, that he or she will make fewer errors in recordkeeping, and secondly, that he or she will spot problems.

Eliminating Late Fees by Paying Bills Promptly

It’s easy to get behind on paying bills and invoicing (more on that in a minute) when you’re juggling bookkeeping with running your business. A bookkeeper will help you get your bills in order—and make sure that they get paid on time. In “When to Hire a Bookkeeper or Accountant,” The Fresh Diet CEO Zalmi Duchman tells Entrepreneur’s Eileen P. Gunn that he estimates his company is “saving 500 to1,000 in late fees per quarter.” That’s a lot of dough.

Decreasing Your Accounts Receivable Turnover by Invoicing Effectively

Getting your books in pristine shape means you’ll be able to invoice more effectively and quickly. Whether your bookkeeper does invoicing manually or sets up an automated system for you, you’ll be cutting down on the length of your invoicing cycle—and getting paid faster.

Eliminating Your Own Time Spent Bookkeeping

Hiring someone to do your books (whether that’s full-time, part-time, or on a handful of occasions yearly) means you don’t have to. That means you get back the time you were spending on recordkeeping. Depending on how complex your finances and the number of transactions you typically do, this could amount to quite a bit of your own time invested back into your business.

Understanding Your Numbers

You should have a good sense of your P&L and other numbers (especially if you’re doing your own books!). But a bookkeeper can help to clarify anything that is confusing about your figures and identify the cause of irregularities.

New user agreement and intermediate service providers

The IRS will be rolling out a new e-Services user agreement in late October. All e-Services users will be required to accept the terms of the new agreement.

The new user agreement will also address intermediate service providers, which are private companies that offer software or services to e-Services users, such as helping users gain access to taxpayer transcripts. The new user agreement will require tax professionals to ensure that any intermediate service provider they use does not store usernames, passwords, or PINs. Practitioners will also be required to notify clients if they use an intermediate service provider to gain access to taxpayer information.

New authentication process

All e-Services users will be required to register using a new secure authentication system. This will involve a two-factor authentication process, in which users will enter their username and password, and the IRS will then send a security code in a text message to their cellphone or to the IRS2Go app

Users who cannot authenticate their identity through the new system will have to go through the IRS help desk. However, the IRS says that even if a user validates his or her identity through the help desk, the user will still have to obtain a security code via text message or the IRS2Go app every time he or she logs in to e-Services.

WASHINGTON – The Internal Revenue Service today announced special relief designed to support leave-based donation programs to aid victims of Hurricane and Tropical Storm Irma. This parallels relief granted to Hurricane and Tropical Storm Harvey victims.

Under these programs, employees may forgo their vacation, sick or personal leave in exchange for cash payments the employer makes, before Jan. 1, 2019, to charitable organizations providing relief...

Georgia — Victims of Hurricane Irma that took place beginning on Sept. 7, 2017 in the state of Georgia may qualify for tax relief from the Internal Revenue Service.

The President has declared that a major disaster exists in the state of Georgia. Accordingly, the IRS announced today that affected taxpayers in the entire state will receive tax relief.

Individuals who reside or have a business in any of the 159 counties in Georgia may qualify for tax relief.

As Hurricane Irma weakened into a tropical depression, the IRS said it is providing tax relief to people affected by the massive storm in parts of Florida, Puerto Rico, and the Virgin Islands (IR-2017-150). The relief applies to any area designated by the Federal Emergency Management Agency as qualifying. The IRS disaster relief page currently lists the islands of St. John and St. Thomas in the U.S. Virgin Islands; the municipalities of Culebra, Vieques, Canóvanas, and Loíza in Puerto Rico; and Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota, and St. Johns counties in Florida as eligible for relief. In a statement, IRS Commissioner John Koskinen said, “The IRS will continue to closely monitor the storm’s aftermath, and we anticipate providing additional relief for other affected areas in the near future.”

The relief includes an extension of time to file certain individual and business tax returns and make certain tax payments. It applies to, among other situations, individuals who have returns on valid extensions due Oct. 16, 2017, and businesses whose returns are on valid extensions and are due Sept. 15, 2017. Both have until Jan. 31, 2018, to file.

The IRS is also extending to Jan. 31, 2018, the deadline for individual taxpayers to make estimated tax payments due Sept. 15, 2017, and Jan. 16, 2018. It noted that taxpayers whose individual income tax returns were on extension are not eligible for relief from paying any 2016 income tax because those payments were due April 18, 2017.

The IRS noted that a variety of other tax deadlines qualify for relief, including the Oct. 31, 2017, deadline for quarterly payroll and excise tax returns. In addition, the IRS announced that it is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster relief period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. Although taxpayers who live in the affected areas should automatically qualify for relief based on their address in IRS records, if they mistakenly get a penalty notice, they should call the number on the notice.

In addition, the IRS says it will work with any taxpayers who live outside the disaster area if their records necessary to meet a deadline occurring during the postponement period are located in an affected area. These taxpayers should contact the IRS at 866-562-5227.

The IRS also announced that victims of Hurricane Irma who have retirement assets in qualified employer plans can take hardship distributions or loans from their plans to alleviate hardships caused by the hurricane (Announcement 2017-13). The IRS is also permitting such plans to disregard procedural requirements for plan loans for these purposes between Sept. 4, 2017, and Jan. 31, 2018.

Finally, the IRS also is waiving the penalty for using or selling dyed diesel fuel for use on highways in Florida between Sept. 6, 2017, and Sept. 22, 2017 (IR-2017-149).

Many small business owners use a sole proprietorship which allows them to report all of their business income and expenses on a Schedule C attachment to their personal income tax return. If you run the business as an LLC and you are the sole owner, the IRS also allows you to use the Schedule C and submit it with your 1040 tax return.

In contrast, partnerships, sole proprietorships, and limited liability companies (LLCs) are not taxed on business profits; instead, the profits "pass through" the businesses to their owners, who report business income or losses on their personal tax returns. Form 1065 is filed with IRS and schedule K-1 reports with your individual tax return.

If the only member of the LLC is a corporation, the LLC income and expenses are reported on the corporation's return, usually Form 1120 or Form 1120S.

Why does it matter? Because good accounts are the basis of a good business. If you don’t have an accurate grasp of your financial situation, your plans will be based on little more than guesswork. Investors or lenders will also want to see well-organized finances before they commit to funding your business.

1. Account. You'll set up financial accounts like checking and savings in QuickBooks, but in accounting terms, this refers to the accounts in your Chart of Accounts: asset, liability, owners' equity, income and expense.
2. Accounts Payable (A/P). Everything that you owe to vendors, contractors, consultants, etc. is tracked in this account.
3. Accounts Receivable (A/R). This account tracks income that hasn't been realized yet, like outstanding invoices.
4. Accrual Basis. This is one of two basic accounting methods. Using it, you record income as it is invoiced, not when it's actually received, and you record expenses like bills when you receive them. Using the other method, Cash Basis, you would report income when you receive it and expenses when you pay the bills
5. Asset. What physical items do you own that have value? This could be cash, office equipment and real estate. In QuickBooks you'll be managing two types. Current Assets are generally used within 12 months (or you could convert them to cash in that length of time). Fixed Assets refers to belongings like vehicles, furniture and land, property that you probably won't use up in a year and which usually depreciates in value. Depreciation is very complex; you may need our help with that.
6. Average Cost. This is the inventory costing method that programs like QuickBooks Pro and Premier use to calculate the value of your stock.
7. Cash Flow. This refers to the relationship between incoming and outgoing funds during a specific time period.
8. Double-Entry Accounting.This is the system that QuickBooks uses — that all legitimate small business accounting software uses. Every transaction must show where the funds came from and where they went.
9. Equity.This refers to your company's net worth. It's the difference between your assets and liabilities.
10. General Journal. QuickBooks handles this in the background, so it's unlikely you'll ever be exposed to it. We sometimes have to create General Journal Entries, transactions required for various reasons (errors, depreciation, etc.) that contain debits and credits. Please leave that to us.
11. Item Receipt. You'll create these when you receive inventory from a vendor without a bill.
12. Job. QuickBooks often associates customers with multi-part projects that you've taken on, like a kitchen remodel.
13. Net income. This is your revenue minus expenses.
14. Non-Inventory Part. When you purchase an item but don't sell it or you buy something and resell it immediately to a customer, this is what it's called. It's merchandise that isn't stored by you for future sales.
15. Payroll Liabilities Account. QuickBooks tracks federal, state and local withholding taxes, as well as Social Security and Medicare obligations, that you've deducted from employees' paychecks and will remit to the appropriate agencies.
16. Post.You won't run into this term in QuickBooks. It simply refers to recording a transaction within one of your accounts.
17. Reconcile. QuickBooks helps you with this. It's the process of making sure your records and those of your financial institutions agree.
18. Sales Receipt.This is how you record a sale when payment is made in full during the transaction.
19. Statement. You'll generally use invoices to bill customers in QuickBooks, but you can also send statements, which contain transaction information for a given date range.
20. Trial Balance. This standard financial report tells you whether your debits and credits are in balance. Should you run this report and find a problem, let us know right away.
21. Vendor. With the exception of employees, QuickBooks uses this term to refer to anyone who you pay as a part of your business operations.

Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation.

Six main groups are intimately connected to the life of a business. Knowing who they are, what they expect and how you’re interacting with each of them is essential.

• Customers, who buy the products and services that the business sells.
• Employees, who provide services to the business; they are paid wages and salaries and are provided with a broad range of benefits such as a pension plan and paid holidays.
• Suppliers and vendors, who sell a wide range of things to the business such as legal advice, electricity and gas, telephone service, computers, vehicles, tools and equipment, furniture and even audits.
• Debt sources of capital, who loan money to the business, charge interest on the amount loaned and have to be repaid at specific dates in the future.
• Equity sources of capital, the individuals and financial institutions including private equity firms who invest money in the business and expect the business to earn profit on the capital they have invested.
• Government agencies that collect income taxes, payroll taxes, value-added tax and excise duties from the business, or who provide support and grants to encourage business expansion and international trade.

Half of small business owners report that accounting is their least favorite task. Assuming you’re not an accountant yourself, you probably understand why. And if you mess up your records or bookkeeping? You could easily be looking at lost money, missed opportunities, or even a knock on your door from the IRS. No, thank you.

Although you might find it tedious at first, managing your small business’s financials properly is key to your success as an entrepreneur. But nobody said you have to do it all on your own. Every small business could use a great suite of accounting tools to help them out. If you’re talking about the world’s best accounting tools, it’s simply impossible not to mention the one and only QuickBooks Online.

QuickBooks Online offers the classic suite of accounting tools for anyone and everyone: dashboards for your business’s financial data and records, financial reports that you can customize according to your own needs, an invoice generator, online payment receipts, payroll processing, and the ability to turn pictures of receipts into catalogued business expenses. Plus, QuickBooks Online syncs with your bank account and business credit cards so that your business’s financial data is always up to date. And if that weren’t useful enough, you can also share your QuickBooks Online with your accountant to simplify financials during tax time.

Bookkeeping refers mainly to the record-keeping aspects of accounting. Bookkeeping is essentially the accounting process (some would say the drudgery) of recording all the information regarding the transactions and financial activities of a business.

Here are few basics of the most common types of bookkeeping accounts for a small business that you should know:

• Cash. It doesn’t get more basic than this. All of your business transactions pass through the Cash account, which is so important that often bookkeepers actually use two journals -- Cash Receipts and Cash Disbursements -- to track the activity.
• Accounts Receivable. If your company sells products or services and doesn’t collect payment immediately you have “receivables” and you must track Accounts Receivable. This is money due from customers, and keeping it up to date is critical to be sure that you send timely and accurate bills or invoices.
• Inventory. Products you have in stock to sell are like money sitting on a shelf and must be carefully accounted for and tracked. The numbers you have in your books should be periodically tested by doing physical counts of inventory on hand
• Accounts Payable. No one likes to send money out of the business. But it’s a little less painful if you have a clear view of everything via your Accounts Payable. Good bookkeeping helps assure timely payments and – importantly – that you don’t pay anyone twice. Paying bills early can also qualify your business for discounts.
• Loans Payable. If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this is the account that tracks what’s owed and what’s due.
• Sales. The Sales account is where you track all incoming revenue from what you sell. Recording sales in a timely and accurate manner is critical to knowing where your business stands.
• Purchases. The Purchases Account is where you track any raw materials or finished goods that you buy for your business. It’s a key component of calculating “Cost of Goods Sold” (COGS), which you subtract from Sales to find your company’s gross profit.
• Payroll Expenses. This is the biggest cost of all for many businesses. No matter how much you beg, few people want to work for nothing. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements. Shirking those responsibilities will put you in serious hot water.
• Owners’ Equity. This account has a nice ring to it. Basically, it tracks the amount each owner puts into the business. “Many small businesses are owned by one person or a group of partners; they’re not incorporated, so no stock shares exist to divide up ownership,” says Epstein. “Instead, money put into the business is tracked in Capital accounts, and any money taken out appears in Drawing accounts. In order to be fair to all owners, your books must carefully record all Owners’ Equity accounts.
• Retained Earnings. The Retained Earnings account tracks any of your company’s profits that are reinvested in the business and are not paid out to the owners. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time and is important to investors and lenders who want to track how well the company has done over time.

Many business owners think of bookkeeping as an unwelcome chore. But if you understand and make effective use of the data your bookkeeper collects, bookkeeping can be your best buddy, helping you run your business more effectively.

You are a business owner 365 days of the year. For the new business owner, oftentimes the “normal” work hours are spent building the business and talking to prospective clients. The evenings are typically for the administrative work and all of the other things you could not fit into the day. Many start a business to have control over their work schedule, which can happen—eventually but for many, it means no vacations and possibly no salary as everything you earn is being put back into the business.

Know your numbers. Understand how much money you need to break even and how to determine profitability. Knowing your numbers will help you to understand the financial health of your business. So many business owners grossly underestimate how much they will need to start their business, how much it will take to support the business before the business is profitable, and even how much to charge for the product and/or service. If you need help creating financial statements and analyzing your current or future business, let us help you. We can take care of your numbers while you are talking care of your business.

Do not forget Your Legal Entity Affects Your Tax Burden.

Think that all small businesses endure the same tax burden? On the contrary, the legal entity you elect to form can have a tremendous effect on your tax liability throughout the years.

From sole proprietorships and LLCs, to S corporations and partnerships, there are various business types, each with its own benefits and limitations. For example, S corporations offer small business owners the advantage of paying taxes at the shareholder level, rather than being subject to higher corporate rates. However, a company of this kind must be limited to 100 shareholders and feature a single stock class. On the other hand, while C corporations can deduct a wider range of expenses and include hundreds of shareholders, these groups must contend with double taxation.

One of the most unfortunate reasons that small businesses struggle is from miscalculating expenses and taxes.

• Some companies spend money they do not really have
• Some companies miss tax payments
• Some companies lose out on tax refunds

No matter how strong your products and services, accurate accounting can make or break your business. What to Record In most cases, what you will record is the transaction you made with the customer. These are the incoming payments:

• What you sold
• Who you sold it to
• How much money/revenue you collected
• When you received the money

As a small business owner, it's important to keep track of every dollar that goes in and out of your company, including not only what you see on a day-to-day basis but also your monthly expenses. Remember that many of those payments you made may be deductible based on your income or the type of business you own – even coffee with a potential partner or the health insurance you purchased for yourself.

• The taxes you paid
• The employees you paid
• The business expenses (office supplies, inventory, etc.) you paid
• The rent/utilities you paid

Often if you are the one undertaking the accounting, your book-keeping may take the lowest priority on your to-do list. But if you are outsourcing it to an employee or accountant, it is important that you ensure that your books are maintained on a daily or weekly basis. By doing so, you will ensure that the accounting for your business doesn’t pile up and important data is not missed or forgotten about.