Twelve Days of Christmas Bookkeeping

We can’t wrap up the year without a playful holiday episode, can we? That’s why our resident Bookkeeping Mensch, Paul Rosenblum, is here to share his bookkeeping take on The Twelve Days of Christmas. He outlines key bookkeeping tasks he focuses on in December to prepare for tax season, such as prioritizing clients, reconciling accounts, and reviewing new tax laws. These preparation tasks help him stay organized so they’re likely to help you do the same. And one more thing to contemplate before 2025: Why was the bookkeeper's favorite Christmas carol 'Silent Night? Because it’s the only time their books are balanced! Happy Holidays and Happy New Year everyone!

Transcript

Episode 48

It’s the last episode of the year – so-- Season’s Greetings and Happy New Year to everyone who listens to this podcast!  

This episode is going to be based on the 12 Days of Xmas song (or-- the 12 bookkeeping things that I think about and act upon in December) – just a hodgepodge of random things about bookkeeping and clients that go through my head in December and moving into tax season that officially starts in  Jan.  I’m ‘trying to put all my ducks in a row for tax season ---- Paul Rosenblum

Before I begin, thank you for signing up for the newsletter. I have tax information and other related bookkeeping info there, but recently I’ve gotten more personal about who I am as a person, so please sign up for the newsletter at paulrosenblum.substack.com or use the link in the episode notes; leave comments and share the newsletter with others.  Ok -- here we go --   In no particular order -- 

1. Taking on small clients at the end of the year.  
   1.   There are always new clients who come to me in November and December of every year to have me do their bookkeeping for the entire year.  I look at how much work and how much time it would take me to get the year done very carefully before I take them on. 
2. Prioritizing which clients to get 100% completed 
   1.   Since partnerships and S Corporations (and LLC’s filing as S Corp’s) are due to get filed (or at least get an extension filed) on March 15th, those companies come first in terms of completing 100%.  However, because of 1099’s being produced in January of every year, at least the expenses for every company must be input so reports can be run showing all possible 1099 recipients. 

1. Reading up on any new IRS tax laws that I might have missed that pertain to the current tax year. 
   1.   For example, if there have been any tax changes such as coffee and snacks for the office now being 50% deductible, rather than 100% deductible as in earlier years, I must make sure that they are reflected in the correct category in all the companies before the books are forwarded to the tax preparer. Bottled water is still an office supply (100% deductible) in the U.S. Coffee/and snacks that you bring back to the office have been 50% deductible since the beginning of 2024. (Make that a subaccount of ‘Business Meals’)

1.  Going through every set of books to make sure that there are no financial transactions in bank accounts and credit card accounts that have not been reconciled before giving the books to the tax preparer. 
   1.   This could affect the balance sheet or the Income Statement (Profit and Loss). 
2. Going through the balances on all loans to the business to make sure that the balances reflect correctly. 
   1.   If the client is a partnership or a corporation, the balance sheet is reported to the IRS.  So, loan balances reported must be correctly reported.
3. Making 100% sure that there are no financial transactions left in the misc. account because I don’t know what category they belong in. 
   1.  Sometimes, even after asking the client, I still don’t know the correct way to categorize, so I will let the tax preparer know that there are 1 or 2 transactions in that account for him or her to determine where they go.  So, sometimes there are leftover ‘Ask the Client’ transactions, but only for specific reasons. 
4. Make sure that the filing cabinets are cleared out except for the last calendar year of statements, emails, and anything else I print out to make room for the upcoming year’s paperwork.  
   1.   I print out bank and credit card statements and file them when I’m done with them. I use recycled paper and recycle it again at the end of the next year from the bankers’ boxes that I use to archive statements. 
5. Send emails to all the clients who I want to raise fees to give them plenty of warning.  I do that at the end of November. 
6. Remind all clients that they need to keep receipts and have them organized for any possible audit in the future. 
   1.   In the U.S., the IRS isn’t that strict on receipts.  If audited, they will ask to see receipts for everything, but if you have 25% of the receipts for a particular category, like business meals, they will not throw out 75% of the expenses with no receipts.  They will disallow some, but not all, even without receipts. They base it on trends and the consistency of each transaction that is assigned to ‘business meals’ for this example. 
   2. For my Canadian friends, my Canadian bookkeeper friend tells me that the “Canada Revenue Agency’ (CRA) is very strict about receipts.  No receipt, no deduction.  Period. So, bookkeepers there won’t do bookkeeping (or at least she doesn’t) without each and every receipt provided to them by their clients.  (Smart!)  So, for us U.S. taxpayers, we could get a break, unless the auditor is in a bad mood that day and won’t give you a break about receipts.  By the way, receipts don’t have to be the original paper receipts, they could be scanned into a computer or an app online, as long as they are readable. 
7.   Making sure I order all the reams of paper, toner ink, coffee, tea, snacks, paper clips, binder clips, highlighters, etc. that I need to make sure that I don’t run out during the upcoming tax season. 
8.   I also personally look at every key card that I have for clients’ bank accounts and if the numbers are starting to fade, I have the client call the bank to get them replaced.  I don’t need in the middle of tax season to have a key card quit on me and not be able to get into the bank account for the information that I need. 
9.   Remember to get my haircut in the last week of December pretty short, so that I don’t have to worry about that during tax season. … and since this isn’t the exact 12 Days of Christmas song, I have to be different – so let’s add 2 more! 
10.   Take my wife out to a very good dinner before the end of the year, and a. good movie and say goodbye until April (No, I’m not 100% serious here, but she knows that I will work more hours and most Saturdays, and not want to do much on Sundays other than sleep and relax. 
11.   Get extra sleep, get in that mind-frame and get my head into the official tax season, break out the sports jacket and the good pants (just in case a client wants to see me in person) 

And yes, I almost forgot.  Remember to go out and get a ‘Partridge in a Pear Tree’.  

Happy New Year to All! 

On to 2025!