Boost Efficiency & Accuracy: Essential Year-End Tips for Accountants & Bookkeepers

Let's talk a little bit about getting through accounting or bookkeeping season as we start to button up these files for our clients. There's several areas I think we need to address when we start to make our way through this important time of the year, and we should be really looking at the records every month. But you probably have a client or 2 that's new to you that you're trying to hurry up and clean it up to get it ready for the tax accountant. Or maybe you are a tax professional and you're trying to get all these done and hopefully you're probably going to put it on extension. That's what most of the tax professionals do. I highly recommend if you're doing any data migrations at this time of the year, if you're in— and right now I'm in February 2024— if you're doing data migrations, you might want to really consider reaching out to the tax professional, especially on a new client, and saying, look, I'm in this middle of this project, or even a big massive cleanup. I'm in the middle of this project. It's a messy one, and I'm gonna try to get this done for the client, but it will never be done in time for you to do the filing. So can you put the client on extension? Don't let that kind of sit. So that's a recommendation there. So as you start to button up the records for year end, you wanna pull a profit and loss report. You want to pull one for just for the year. You want to pull one for year to year comparison. So compare last year to this year and take a— well, the prior year to the year before it. So if in my case I'm in February 2024, I'm going to pull up a profit and loss 2023 and look at it versus 2022. You're going to do this with the profit and loss and the balance sheet. Why are we doing this? Well, we want to do this to kind of compare the numbers and see if the increase— maybe they had increase in sales. You want to probably see— you're going to see the increase in some of the expenses. You want to really take a good look at it. Maybe they hired staff. You're going to see an increase in payroll. Just look at it to see if it logically makes sense. Another place you want to look is in Keeper. So if you're using Keeper software, it's an excellent software for this. You're going to just pull that into Keeper and take a look. It's going to analyze everything for you. It takes a lot of the, the, the sweat equity out of it for us, and it looks at it from a tax person's perspective. I think Ben did a great job with making this software— Ben and Kenny making the software set up so that you can look at it. And they— it looks at it and looks at big expenses. So if you've got some large expenditure that's booked in the expenses, it's going to key it to you to see it, that this doesn't seem right. Maybe it belongs in the asset, maybe not. Maybe they are expending it for the year, but you want to see that. If a client maybe paid a whole year subscription last year, in the, in the prior year, in December, trying to get their expenses up, and they paid for 2024 expense fully in their cash basis, most of the times the tax people will let them take that expense for the year of 2023. I mean, they're taking it once they're taking it in a prior year. I don't quite understand why you'd want to take it in a year that the actual service didn't happen. But a lot of firms do this. They kind of kick the can down the road, basically. They're always pushing to a year ahead. But it's something we do see. And you want to have that discussion with the client when you see something. They paid $10,000 and it's $10,000 worth of software in the next year that they're paying for the subscription in December. Maybe have a discussion with the client of what they're trying to achieve. I've seen clients prepay their like Blue Cross. I've seen clients try to get their expenses up so they have less tax at, you know, less profit at the end of the year. So they have to pay less tax. That will get pushed if they're an S corp, gets pushed under their K-1, passes through to them if they're a sole proprietor. I mean, they're just trying to mitigate the amount of taxes they have to pay. I've seen some lots of creative things over the years that people have tried to do. Some of them are, are actually legitimate. If you need to talk to the tax person, if you think it's something doesn't seem quite right, you can talk to the tax person. One of the things we make sure that we do is we make sure that we take the time to meet the tax person, get to know them. Now is not the time that you can do the meet and greet, but if you've had a client in the past, want to find out what they need, and then I'll actually take in that section of management reports and build out the management report for the year-end that the tax person wants to see. Lots of times they want the general ledger, they want to see, and I like to recreate the general ledger, not the boilerplate one from QuickBooks, but try to take the debit and the credit, put that in and, you know, take off the— is it the ongoing? The amount. So you do debit, credit, take off the amount column and then leave the balance column and then just kind of reformat it so it looks better. Maybe you expand the section. where the description is, 'cause that's probably important to the tax person. And just recreate that, memorize it, save it. Add that to your management report, add that to your balance sheet, your profit and loss. It's usually what they want to see bundled in. If they have a compensation report, you want to have that in there as well. If they break it out by their equity, you want to have that in there. If you start to move things up to the equity account, kind of break it out between partners, you want to see that there as well. If they classify reports, you want a profit and loss by class report in there. If they do a lot of work by different locations, you want to have that report in there. There's just a lot of things you want to add to it. But once you've gone through that process, it's hard to remember the next year what exactly the tax person needs. 'Cause every tax person has a different want or ask. For the most part, I find that they sometimes they want all the, they want to see all the, depending on the tax person, they want to see all the tax returns for the payroll. I'm glad they're asking for that. I love having that ability to exchange that in Liscio. Now they're in Liscio. I've dumped them out of the software. Wherever they have their tax, wherever they have their payroll. I'm taking it outta the payroll program. I'm keeping a copy of it, which is a great thing to do for your client. Keeping all the records in one place. Everything in our Lycio is tagged. We keep it nice and neat and orderly. So if they ever need to go back to it, they have that ability to. It's, it's a great software. So not to— besides Keeper, Lycio is another great one 'cause we can communicate securely but also keep the documents safe. Other things we'd like to talk to them about. Take a look at your payroll accounts, even if you have a payroll service. Take a look. Oh, earring just dropped. Take a look at the payroll accounts and see where, where things are, and they line up and make sure that they align with the tax return. That's what the tax person is going to do. Why not get ahead of it and do that as well? Let's see, what else do you really need to do? There's just so many little steps that we need to take when we do these, get these records to the client. I mean, oh, we're doing it every, every year. We're, we're going through the month by month by month. Quarterly, you should be doing those tax returns as well. But you want to make sure that you keep the records tightly bundled up nice and neat. You wanna look at those unapplied cash payment income or unapplied bill payment expense or whatever it's called. Make sure those aren't in there. That's usually a dating issue with the invoice and the payments or a dating issue in the bill and the bill payment, or there's no bill. Somebody deleted the bill but made a bill payment and deleted the bill. We see that sometimes. So there's lots of little nuances there. You wanna look at. I also like to take a look at what was the total cash coming into the business. You've got everything reconciled, make sure all the credit cards are reconciled. Go to that credit card account and make sure on the credit card that you've balanced that back to the parent if they've got sub-accounts. So you don't have some crazy balances on the balance sheet. I'm trying to think of what else we, we actually do. So if you go through that bookkeeping review in QuickBooks, if you don't have Keeper, or use Keeper to kind of go through the files, look at them. Keeper has some great reports too. If you are using Keeper, take a look at the reports, the cash flow report. There's really good reporting in there, some profit and loss reports in there. You can really kind of play with it. If you're not using LiveFlow, if you are using LiveFlow, play around with that because there's so much there that you can pull. I mean, Cyrus creates some really beautiful reports for some of our clients that are just like, they have the wow factor. So if you are to that level where you can afford to have LiveFlow and Keeper and all those other software in place, you know, you're, the firm can sustain that, definitely do that. If not, think about going into Digit Software. Digit Software also has a way to look at things. It's actually looking at things like Keeper. It's free, 5 accounts for free, and the price per file is very minimal. And then take a look at that and then kind of look at the reports you can create 'cause it's got some beautiful charts and graphs. If you're— attorneys like to see pictures, so give them the pictures. Show them that you took that extra step to care and that you're not some generic firm that never talks to the client, that never has any communication with the tax person other than to ship the reports off, and that is really proactive in the file. That's gonna set you above automated systems, Bench, or these other systems that are kind of cheap systems. You wanna elevate your practice to a place that you are in a bigger— you have a higher level of service. Mm-hmm. Higher touch points, you respond to your clients. These are all the little things that are gonna make you stand out in the crowd. And isn't that what we all wanna do? We wanna be that accountant that people are like, wow, my accountant sends me my reports every month. I don't have to ask for them. My accountant tracks KPIs and lets me know when things seem to be off-kilter. My accountant, that, that, that, all those things. So that's my recommendation for you. And hopefully this is helpful. And these are the things, these are the conversations we have in the Law Lab. So if you're interested, please join us in the Accountants Law Lab. We would love to have you. Come in our mastermind group, join us, talk to us, learn more about legal accounting. On that note, we'll see you all next week. Bye now.