With Q4 on the horizon, it’s time to start thinking about large-scale, year-end accounting tasks. Depending on your business’s fiscal year structure, you may be heading into the most crucial quarter of the year—financial reporting, strategic planning, evaluations, and closings.
Activities in Q4 often set the tone for the coming year while also wrapping up the current one. Staying on top of accounting in this period can ensure success for the future.
#1 – Start Planning for Year-End Closings
In Q4 accounting, year-end closings are absolutely critical. This involves reconciling all accounts, fixing any errors and adjusting entries with issues, and ensuring you have an accurate picture of the company’s financial health.
In preparation, make sure you gather all related documents, check accounts payable and accounts receivable for outstanding invoices, and identify any errors that will require additional focus or work for the year’s end.
If you’re not sure what will be required, reach out to stakeholders to understand what reports they will need for forecasting and planning (i.e. if next year will involve sourcing more capital, your team will likely prioritize data on profit potential).
#2 – Update Financial Records
As part of your preparation for year-end, you must review all financial statements within your business. This includes your income statements, balance sheets, cash flow statements, accounts payable and receivable, credit card statements, bank statements, and any and all other paperwork that reflects the financial health of your organizations.
Be sure to identify and fix any errors, raise flags for any discrepancies, inconsistencies, or potential instances of fraud, and to honor your operating procedures and accounting principles.
#3 – Make Final Preparations for Tax Opportunities
While you’ve likely already engaged in strategic tax planning, going into Q4 you will need to review your progress and ensure you are on track. This means making sure you will meet qualifications for deductions, estimating mileage and expenses, and exploring strategic opportunities to lower your tax burden—i.e. increasing expenses to stay in a preferred tax bracket, deferring income, capital loss harvesting, and making any changes to income/spend to benefit from all tax opportunities.
#4 – Begin Discussions for Next Year’s Goals
With preliminary financial statements available, it’s time to begin looking at the coming year and discuss next year’s goals. While this may seem premature, it’s not. This period gives your accounting team (and/or CPA) time to gather the necessary financial documents and reports to support your goals for the coming year and make any adjustments.
Your goal discussions should include everything from changes to financial flow (i.e. cash injections, introducing new services, increasing inventory) to overall business strategy changes.
#5 – Evaluate Existing Processes, Team, and Technology
It’s always a good measure to evaluate your existing processes, team, and technology at the end of the year. Look for ways to increase efficiency, eliminate duplicate work, and to improve your accounting team’s performance during Q4. This doesn’t have to just be an external evaluation—ask your team for specifics on what’s working and what isn’t. It may be time to switch to a more robust and powerful accounting software, expand your team, or reconsider how you tackle invoices.
Q4 can be an exciting time for businesses. It’s an opportunity to review your performance and growth over the first three quarters of the year, and get a head start on planning for the future. These five tips are part of critical strategic planning that ensures a strong finish to the year, well-informed plans for the coming one, and overall, what we all wish for in business—long-term growth.
