Updated: Feb 2, 2022
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Although some people are already in the new year, business owners are still in 2021 because they need to prepare the books for the end of the year review. We want to make this process and smooth and stress-free as possible.
This time can be very overwhelming for most small business owners. Therefore, I have some tips to make this process easier for you.
Review all unpaid invoices
You need to make sure all the invoices you sent have been paid. If not, there are some actions you can take to avoid being taxed on the income you didn’t receive. These actions will differ between different company entities.
Record all business expenses
Don’t forget to register all your business expenses. This is very important because it can help you lower your Income-tax bill. Remember to archive all the documents needed to prove your business expenses so everything is ready in case of an audit.
For Business Owners of GmbH (LLC) or AG (PLC), pay close attention to all the expenses you are paying in January 2022, which are related to services done in December. Make sure to inform your accountant of these expenses.
Reconcile your bank accounts & other accounts
This is another important step often missed by small business owners. Many small business owners have just one bank account (for personal and business expenses). Although this is a mistake, nothing can be done about it at the end of the year, and now one must go through the whole year and make sure that their bank account balance is the same as in their books. the reality is that sometimes we can forget to register an expense or we miss a payment, it happens!
For GmbH (LLC) or AG (PLC) business owners, there are other accounts you can reconcile. Like the credit card accounts, Customer Accounts, Suppliers Accounts…
Review your payroll taxes
For those who have payroll, this is an important step. At the beginning of the year, you give a provisory payroll amount to some Institutions. All the taxes and insurances (except Quellensteuer) are calculated according to that amount. At the end of the year, when you know the actual amount paid, you need to report it to all Institutions once again. Then, you will either pay more taxes and insurance (in case you paid more) or receive it (in case you paid less). Remember that the deadline to report this is 31.01.2022.
Run Financial Reports
Now that you made sure that all the numbers are correct, you can run your Financial Reports, review them, and plan your budget for 2022 using those 2021 Financial Reports.
Now that you’re off to a great start, let’s 2022 your best year yet!
If you have any questions, feel free to email Cristina Quesado firstname.lastname@example.org