10 Accounting Tasks Small Businesses Should Do Before The End Of 2022

Mike Ford is the Managing Director and Founding Member of PBO Advisory Group.

The clock is ticking. Soon we’ll be celebrating the new year, but before you do, there are 10 accounting tasks you should complete to optimize the close-out of the 2022 business year and position you for 2023.

1. Review Outstanding Bills And Invoices

Verify who owes you money and work on collecting it. Review to whom you owe money and pay outstanding bills before the end of the year. Write off aged invoices for which you most likely won’t be paid.

2. Review Expenses

Double-check all of your expense entries to make sure each is properly categorized. Review all expenses over $2,500, as these could actually be reclassified as assets.

3. Reconcile Accounts

Reconcile all bank and credit card accounts. Review and reconcile all balance sheet accounts. Record accrual for any anticipated liabilities. There are new standards for lease accounting that may affect your business if you lease real estate and/or equipment. If you need help understanding how these changes apply to you, contact a finance professional with specific knowledge in this area.

4. Prepare To File W-2s For Employees

Double-check all employee Social Security numbers and addresses (some of your employees may have moved). Make sure you have properly recorded all payrolls. Verify employee wages, benefits and deductions. Plan for and prepare to pay year-end bonuses.

5. Prepare To File 1099s For Vendors

Collect missing W-9 forms. Review all vendors paid over $600 for the calendar year. Verify current mailing addresses and EIN numbers for each vendor. January 31, 2023, is the deadline for filing 1099s, so plan accordingly.

6. Assess Inventory

Print and post all transactions, transfers and adjustments. Complete a physical inventory count that ensures a clean inventory record for the start of 2023. On the last day of business in 2022, run and print a valuation report.

7. Review PPP, ERTC, SVOG, City And Government Grants And More

If your business received funds from one of the many government assistance programs available since the onset of Covid-19, there are additional tax planning steps you must take. Gather your 941 and 941-X returns for your tax person to analyze your employee retention tax credits. Review the guidelines of each program to understand what is and is not taxable—each program has distinct rules that must be followed. Confirm if any amendments were made to the 2020 and 2021 requirements and if so, amend your tax filings for those years accordingly.

8. Finalize 2022 Tax Planning

These tasks should have been completed long before the end of 2022, but if you haven’t yet done so, now is the time to identify problems from 2022 and work on fixes for 2023. Meet with your finance team and/or CPA to plan what you can still do this year to decrease your tax liabilities. If you have tax liabilities, review items that you need to purchase before year-end to reduce liabilities.

9. Begin 2023 Planning

Request 2023 goals and budgets from all department heads. Meet with your teams to review their goals and budgets to make sure they have the funds they need to meet their goals. Finalize sales, finance, and operations goals, and complete your 2023 budget.

10. Stay Informed And Be Prepared

Start now by educating yourself about what may be on the horizon for businesses like yours in 2023. As recession fears loom, interest rates rise, layoffs take effect and some supply chain issues persist, you need to be prepared for the challenges and opportunities 2023 may present.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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