Your first time organizing year-end bookkeeping can feel a lot like stepping into a dance class as a beginner. It can be intimidating, and it feels like everyone around you already knows the routine. But not to worry, although you may not be doing complex ‘spins’ or ‘jumps’ your first time around, we have compiled a list of 6 risk factors to be aware of during year-end closeout. Keep reading to learn how you can be one step ahead of the game.
1) Incorrect Financial Reporting
Inaccurate records can lead to incorrect financial reporting. This can distort your view of the financial health of your business. As a result, you can mislead investors and your own management team which can cause a decrease in trust and damage your business’ reputation.
2) Missed Tax Deductions
Incorrect book closure can cause missed tax deductions or overpayments. By not accurately accounting for all eligible deductions, you can end up paying more taxes than necessary which can significantly impact your finances.
3) Audit Risks
Auditors rely on accurate financial records to assess the financial health and compliance of your business. Inaccuracies can lead to miscalculations, delays in the audit process and in some cases penalties or fines.
4) Impaired Decision-Making
An improper year-end closure due to incorrect financial data can impair your ability to make well-informed decisions. Unreliable financial records can hinder your growth opportunities and your business’ ability to compete in the market.
5) Unresolved Transactions
Often when people encounter unresolved or unidentified transactions during the book closure process, they panic. Although it may be tempting to avoid the problem, it is important to investigate these transactions to ensure the integrity of your records.
6) Unaddressed Errors in Financial Statements
We get that errors in your financial statements can be frustrating but if you leave the error unresolved it can significantly impact your year-end closeout. Remember that accuracy is key in financial reporting, and you must investigate errors or discrepancies immediately.
By keeping these six risk factors in mind, you can perform like a pro this year-end closeout. That being said, bookkeeping must be a meticulous process, and you want to make sure you do it right. A great way to ensure that your books are ready for the year-end is to seek help from bookkeeping professionals. Here at STEPS, we offer small business bookkeeping services and can help you ensure that your documents are correct and compliant. Visit our bookkeeping tab to learn more about our services or send us a message with your bookkeeping enquiries on our contact page.
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