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Year End Financial Review – “Time to Close the Books”

As we move into the holiday season and approach the end of the year, it is a good time to think about year end financials and closing of financial books and records.

Closing the books provides an opportunity not only to be certain that all of your accounts are up to date and balanced, but also to assess your financial performance for the year. Accounts accuracy will make your tax preparation easier.

This is also the last opportunity to correct data and reports before final annual financial statements and corporate taxes are due. This process gives you the data needed for strategic financial planning in the coming year.

1. Review the books: Before closing the financial books, start with an end-of-the-year checklist that provides a step-by-step procedure to be sure nothing is overlooked. Review profit & loss statements and the balance sheet looking for capital purchases, unusual activities, improperly categorized entries, and other anomalies. Run reports to analyze for data consistency to ensure that revenue is properly recognized, expenses consistently labeled, and all transactions are properly entered.

2. Tax preparation: When closing the books for the year, review any tax considerations. For example, paying out executive bonuses, contributing to pension plans of 401k accounts, or making equipment or capital purchases will reduce your tax bill. Also consider delaying invoices or billing to the new year to reduce profits. Always review any tax concerns with both the CPA and CFO, since your tax strategy may differ from your business strategy.

3. Close the books: Once you have verified that the accounts are accurate, you can close the books for the year. The objective is to begin the new fiscal period with a clean slate, so once the books are closed you do not want to make additional changes. The use of QuickBooks allows you to restrict access to financial records once they are closed by making them password-protected. As part of the process, create a reference copy of the final reports as PDF files and/or paper copies. Also make back-up copies of the files and store them in a secure location.

Using the proper procedure to close the books each year is a critical part of any successful business venture. Our role is to serve as strategic advisors to our clients, by providing them with accounting services needed to maintain clean, well-organized accounts, facilitate tax preparation and gain insight needed for the strategic planning of their company’s financial future.

Happy Thanksgiving to you and yours!

Note that Pacific Crest Group offers employee development, human resources, recruiting services, accounting and IT services


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This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.

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