Closing an economic period (End of the Year) is a job that requires a lot of attention and detail in its preparation.

It is necessary to make a survey of everything that is relevant to enable the end of the year as an "end" of that time interval and the beginning of a new year that is approaching. For this, after the calculation and sending of the fourth quarter VAT and the December VAT, according to the regime in question, that is, from the 15th of February of each year (in the case of companies with an economic period equal to the calendar year), and after the end of the quarter or month, it is mandatory to analyze the balance sheet in December of year “n”. That is to say, we have to analyze all the balance sheet accounts and evaluate them, in order to proceed with the preparation of the income statement by nature.

We list below some of the points, which we consider important to check when preparing for the end of the year.

  • Closing of Accounts - Control Procedures

  • Inventory verification

Accounting terms, inventories must be measured in the balance sheet at cost or, if lower, at net realizable value.

  • Fixed Assets Conference

It is necessary to verify that all these movements are registered in the accounting and that the reintegration / depreciation maps, as well as the files of each asset, are updated and in compliance.

  • Bank Reconciliation and Cash Balance

All companies carry out financial transactions on a daily basis such as payments, receipts, transfers, investments, among others. Depending on the volume of these transactions, often the bank balances shown by the company's accounts may not accurately reflect your actual financial position at that time. In this way, bank reconciliation is the process of comparing and harmonizing bank statements with the company's internal accounting controls, with the aim of making the accounting records equivalent to the amounts available in the company's bank accounts.

For the closing of accounts, bank reconciliation maps must be constructed, recording the differences found between the accounting balance and the bank balance, as well as maps of cash balances to confirm it with the accounting balance.

  • Circularization of Customers and Suppliers

The balances in the accounting must be compared with those in the company's management, so that they can be calculated.

Staff Account Check

When closing accounts, it is essential to verify the registration of all wage processing carried out and the corresponding payment of remuneration.

  • State Account Conference

It analyzes the different tax items that make up the State account and verifies the payments made. The objective is that the balances represent the amounts actually outstanding / receivable, namely:

- VAT;
- IRC clearance;
- IRS / IRC withholdings;
- Social Security;
- Among others.

  • Account verification Accruals and Deferrals

By applying the accrual regime, it is necessary to check and verify that all movements that were carried over from the previous year or that will carry over to the following year are registered.

  • Account Control - Payroll to Settle

As in the previous point, and because it also falls under the accrual regime, it is necessary to regularize the entries made in relation to vacation payments, vacation subsidies and charges, related to the entity's employees. This is, because they are relate to the previous period.

After carrying out all this verification, you are able to close the accounts and prepare the financial statements.

It is extremely important that your accounting partner has the technical knowledge to carry out all of these procedures, so that they are in compliance with the legislation in force.

At Best Account we strive for rigor, and we are fully available to help you, always, from a partnership perspective, because your success is our success!