January 2023 – Bookkeeping Best Practices
Bookkeeping Best Practices for Year-End Close
As the year of 2022 has come to a close, good practices are important as you complete your bookkeeping file for 2022. To ensure your year-end bookkeeping is as seamless as possible, we compiled a few guidelines on bookkeeping best practices.
Please note: for all business entities going forward, we will include our tax preparation trial balance along with the adjusting journal entries we provide.
Please share the adjusting journal entries, trial balance, and the information below with your bookkeeper!
Steps to Take: Finalizing 2021
– Post the 2021 tax preparation adjusting journal entries we provided you, making sure to post them as of 12/31/2021.
– Once the entries are posted, please pull a Balance Sheet report for the year of 2021 and reconcile all accounts (including net income) against the tax preparation trial balance we provided (if you did not receive a copy of the trial balance, please reach out to us and we will be happy to provide this to you). Each account balance for 12/31/21 should match the trial balance account balances.
– Please note: if you have a bookkeeper, please provide the adjusting journal entries to your bookkeeper to post and reconcile.
– Once you are satisfied that your bookkeeping file is finalized for 2021 and the account balances/income reconcile, please lock the file for 2021 and do not make any further changes to the year of 2021.
Steps to Take: Finalizing 2022
-Reconcile your cash and credit card accounts for each month until you are through the end of the year. Examine the December reconciliation report for any transactions that are older than one year (stale). Please contact us with any questions on stale transactions you identify.
-Review the suspense accounts (such as Ask My Accountant and any uncategorized accounts) and reclassify any balances there to the correct accounts; suspense accounts should have $0 balances at year-end. If you do have questions on the transactions and need to leave them in the suspense accounts, please be sure to leave a memo describing the transaction and what it was for so we can assist in reclassifying it.
–Reconcile payroll/salaries/wages expense at year-end against the year-end wage report from your third-party payroll company. The total amount in the payroll/salaries/wages paid account should match the year-end wage report from your third-party payroll supplier.
-Reconcile all credit card balances against the year-end statements that include all transactions through December 31, 2022. This aids in ensuring all December transactions are accounted for.
– Reconcile all loan balances against the year-end statements from your lenders. The loan balances on the year-end statements should agree to the loan balances on your balance sheet.
– Run a General Ledger report for the full year and examine all transactions for any amounts that may have been misclassified. Make any resulting corrections/reclassifications, if needed.
– Summarize any expenses you paid out-of-pocket (personally) and please provide them to us. We will then be able to adjust these expense items into your business and show your contributions for picking up these expenses.
– Reflect on your asset purchases for the year. Did you purchase any single items costing over $2,500? Please be sure to provide us with the purchase documents, and also review the bookkeeping to ensure these have been classified as fixed assets on the balance sheet.
– Examine your Accounts Receivable balance – run an Accounts Receivable Aging report so you can see what each of your customers owe you. Are there any Accounts Receivable amounts that you do not expect to receive? Please let us know of these amounts so we are able to assist you in writing them off. If there are negative balances, do you know why? Please feel free to contact us with any questions regarding negative balances you identify.
– Examine your Accounts Payable balance by running an Accounts Payable Aging report. Please review and ensure that the outstanding items still need to be paid (payable in 2023). Additionally, if there are negative balances, do you know why? Please feel free to contact us with any questions regarding negative balances you identify.
– Examine your meals expense – meals from a restaurant are 100% deductible for 2022, but other meals are limited to 50%. Please be sure to keep separate accounts for these – meals from a restaurant in one account, and other meals in another account. Please note: entertainment is still completely non-deductible and a separate account for entertainment expense is helpful in properly classifying these costs on your tax return.
– Once you are satisfied that your bookkeeping file is finalized for 2022, please lock the file for 2022 and provide us with a backup copy (QB Desktop) of the file, or notify us that the books are finalized if you are on QuickBooks Online. Please do not make any changes to the bookkeeping file after you provide us with the finalized copy – we will assist with any adjustments from there and provide you with the entries.
Please feel free to contact us with any questions along the way!
2023 Soukup Bush Deadlines
FEBRUARY 15, 2023: For our clients who own pass-through entities – please provide all documents and required information for partnership and S-corporation tax returns by February 15, 2023. In order to provide our best service, your tax return will be extended and completed after April 15, 2023 if there is still outstanding information needed by February 15, 2023.
Please Note: extended business returns will be prepared after the individual filing deadline, April 15, 2023. Thus, we will also be filing an extension for your individual return if we extend your business return.
MARCH 10, 2023: For our clients with individual and C-corporation tax returns – please provide all documents and required information for individual and C-corporation tax returns by March 10, 2023. In order to provide our best service, your tax return will be extended and completed after April 15, 2023 if there is still outstanding information needed by March 10, 2023.
2022 Filing Deadlines
JANUARY 31, 2023 – Form 1099 NEC and the related Form 1096 must be filed with the IRS for any non-employee compensation paid
FEBRUARY 28, 2023 – Form 1099 MISC and the related Form 1096 must be filed with the IRS for rents, royalties, or other payments (MARCH 31, 2023 if filed electronically)
MARCH 15, 2023 – Federal and state income tax returns are due for calendar-year flow-through entities, including partnerships and S-Corporations
APRIL 18, 2023 – Federal and state income tax returns are due for individual taxpayers, C-Corporations, and Estates and Trusts
SEPTEMBER 15, 2023 – Federal and state income tax returns are due for flow-through entities, including partnerships and S-Corporations if extended
OCTOBER 2, 2023 – Federal and state income tax returns are due for trusts if extended
OCTOBER 16, 2023 – Federal and state income tax returns are due for individual taxpayers, and C-Corporations if extended
2023 Estimated Payment Deadlines
JANUARY 16, 2023 – 4th quarter estimated payments for 2022 are due to the IRS and Colorado Department of Revenue
APRIL 18, 2023 – 1st quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
JUNE 15, 2023 – 2nd quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
SEPTEMBER 15, 2023 – 3rd quarter estimated payments for 2023 are due to the IRS and Colorado Department of Revenue
EMPLOYEE SPOTLIGHT: SKYLAR OLMERT
Skylar joined the team at Soukup, Bush & Associates in July of 2022. He moved to Colorado from West Virginia where he graduated from West Virginia University with a Bachelor’s degree in Business Administration and Accounting with a minor in Communications. Before moving, Skylar worked for an accounting firm where he specialized in income tax preparation. He now works in our tax department preparing business and individual income tax returns.
In his spare time, he enjoys exploring Colorado, watching the Mountaineers, and spending time with his wife, Christianna.