We recently sat down with Daniela Gheorghita, owner of dA Bookkeeping (dABookkeeping.com) in Peoria, to talk about critical bookkeeping tasks that small business owners need to handle during December.
NPL: Before we jump into bookkeeping, can you tell us a little about yourself?
Gheorghita: I am 27-years-old. Originally from Romania, I moved to Peoria three years ago. After completing my bachelor's degree in economic studies and with more than seven years of experience in the financial industry, I decided to open dA Bookkeeping in 2021.
It has been a blessing and an amazing adventure. I get to know incredible people. I particularly love working with small business owners.
NPL: What do you love to do when you're not crunching numbers?
Gheorghita: I love baking, hiking, running, cycling and reading. I am extremely social, love to learn new things, and am a risk taker.
NPL: Now, let's turn to bookkeeping. How important is it for small business owners to take stock of their books during the month of December?
Gheorghita: Whether you work with a qualified bookkeeper or you are organizing the books by yourself, you need to make sure that you complete some essential tasks at the end of the year to ensure the accuracy of your final reports.
NPL: Can you outline those critical tasks for us?
Gheorghita: Here are the critical tasks that every small business owner needs to complete at the end of the year.
- Update Inventory
If you are the type of business that sells products and carries inventory, make sure you are making a final end-of-year count to ensure the inventory registered in your accounting software perfectly matches the inventory you have on hand.
- Accounts Payable and Accounts Receivable
It is extremely important to run an Aging AR and Aging AP report at least once a month to see exactly what your business needs to pay and receive.
Since it is the end of the year, this task becomes one of the top three you must complete.
Check all the unpaid invoices. Start sending reminders or reaching out to your customers directly to collect the payments for those past the due date.
Finally, check if you have any unpaid bills from your vendors and always try to make the payments on time to avoid penalties or late fees.
- Record Expenses Made With Personal Accounts or Cash
Every dollar you spend for your business must be part of your books. If, by mistake, you paid for a business expense with your personal card or with cash, make sure you manually record these expenses.
To have accurate reports, you must record everything you purchase for your business. It doesn’t matter if it was not an expensive item—add it to your books. At the end of the year, you will realize these inexpensive items can add up to significant amounts.
- Categorize All Transactions Properly
Many types of bookkeeping software on the market today connect to your bank and import all the transactions. Once you import the transactions, ensure you categorize each transaction correctly. It is extremely important to organize expenses properly because this will impact your financial reports and the tax deductions that you might be able to benefit from when you do your taxes.
- Reconcile Your Bank Accounts
In my opinion, categorizing and reconciling your transactions is a task that should be completed every month or, at the least, every quarter.
By reconciling your bank accounts, you are making sure there are no duplicates. This also helps ensure that the records in your bank account match those in your bookkeeping software.
NPL: Thanks for those great tips! What if someone has been doing their own bookkeeping for a while and feels a bit overwhelmed—should they reach out for assistance, or is it too late?
Gheorghita: Most business owners do their bookkeeping themselves initially, and they can handle it because the volume of work isn't that high. When the business starts to take off, they start postponing the books and fall behind. They find they need help to organize themselves. I encourage business owners to hire a bookkeeper before that happens, but we can help even when it gets to that point.
NPL: Do you recommend people thinking of starting a business reach out even in the planning stages?
Gheorghita: Absolutely! Getting everything set up from the beginning is extremely important, especially if you are directly invoicing customers. Even if your business is not profitable initially and there are more expenses than income, you must still track everything. This helps you, as a business owner, make informed decisions based on accurate numbers.
NPL: How can our readers contact you if they need bookkeeping assistance?
Gheorghita: Readers can contact me by calling 602.739.5642 or emailing me at contact@dabookkeeping.com.