A smooth year-end: what do entrepreneurs need to know about this?
A smooth year-end: what do entrepreneurs need to know about this?
January 2025 - For business owners and their tax advisers, year-end is always another challenging and stressful period. This annual process requires precision and planning, but fortunately there are ways to make it more efficient.
What are the key points of focus in this process? How can a practical checklist help you and your accountant take your company smoothly into the new year?
What does a year-end closing entail?
Year-end closing is a crucial part of your company's financial management. It is a process of checking, correcting and recording the financial records for an entire financial year. An accurate year-end closing is essential to get a reliable picture of your company's financial health.
Why is it important? Because these insights will help you make strategic decisions for future growth. Moreover, it is required by law to perform a year-end closing, where all financial data is brought together and verified.
When should the year-end closing take place?
The exact timing of a year-end closing depends on the structure of your financial year. Many companies use a financial year that runs parallel to the calendar year (1 January to 31 December), but there are also companies with a so-called broken financial year, e.g. from 1 July to 30 June. It is important to keep a close eye on these deadlines so that your financial reports are ready in time for shareholders, investors and tax authorities.
Monthly versus annual closing
While the monthly close is a valuable tool for keeping track of your finances, the annual close is more extensive and complex. It includes tasks such as:
· calculating annual depreciation
· record write-downs
· perform inventory valuation
· review long-term contracts
However, regular monthly closures can help simplify the year-end process. This keeps you always up-to-date on your company's financial situation and allows you to respond more quickly to economic opportunities or challenges.
Checklist: roadmap for a streamlined year-end closing process
An organised approach is essential to successfully close your financial year. Follow these seven steps to make the process run smoothly:
· Collect all financial documents: invoices, bank statements, salary statements,...
· Prepare a closing balance sheet: a clear overview of assets and liabilities.
· Prepare a profit and loss account: insight into the financial performance of the past year.
· Check all data: correct errors and remove duplicate entries.
· Prepare a budget plan: lay the foundations for a successful start to the new year.
· Document key events: link financial data to your company's milestones.
· Share your results: make sure stakeholders have access to reports.
Close smartly with software
Use modern accounting software to make your year-end more efficient. These tools give you insight into missing data and areas of concern, and minimise the risk of errors. So you not only gain time, but also peace of mind.