Most businesses have a 31 Dec year-end, which is fast approaching. Here is a list of 5 important things you need to do to make sure you are ready for your year end and to make a great start to 2014.
1. Creditors. You need to make sure your list of creditors at year end is accurate and complete, make sure you request statements at 31 Dec from all your suppliers. You also need to chase down any outstanding invoices you are waiting for.
2. Stock & Work in Progress. If your business holds stock it is a very important part of your accounts. You should arrange to do a stock take on 31 Dec (or as close to this date as you can). Quantities and cost of the stock need to be recorded, it is also a good idea to note any obsolete stock and exclude this from the count. Stock should be valued at the lower of cost price or resale value. Don’t forget to count any cash on hand the business may have.
If you have ongoing projects that will run into next year you will need to estimate the cost you have incurred on the job up to 31 Dec, this will mostly be made up of labour and materials. It is important to note this as, if you are not going to invoice for this job until 2014, it is important that these costs are also recognised in 2014 (i.e. not this year) to avoid skewing your profits, this is called the “matching concept”.
3. Debtors. Make sure you have billed customers for all work completed in 2012 and don’t forget to chase down customers for money….it is always much easier to get paid in December than it is in January!
4. Payroll. Calculate if there are holidays owing to staff and agree if these can be carried forward into 2014 or paid to employees before the end of the year. It is also a good idea to arrange performance appraisals if you have not done so already in 2013.
5. Budgeting. Set targets for 2014, be ambitious but realistic at the same time. These can be as detailed as you want them to be, I have seen some great budgets drafted up in 30min. Focus on the big ticket items like, sales, cost of sales and wages. If you use an accounting system like Xero, you can enter the budget on the system and it will track how you are doing against the budget each month. This is a powerful tool to ensure your business stays on track in 2014.