Year-end closing is a nightmare for every business that does not have a good accounting team. From leave management to closing your books, running around like a headless chicken during your last quarter can be a pain. It’s stressful to do, but it doesn’t have to be.
Year-end does not have to mean stressful. Here are five tips HR and payroll professionals use to make a business’ year-end closing stress-free.
- Set an Algorithm of Tax Prep Activities Year-Round
Having a suitable protocol for your tax strategy is necessary throughout the year. Most companies set their tax strategy at the beginning of the year. Businesses should implement a tax prep algorithm from the start of the fiscal year to prevent a rush during the fourth quarter.
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This algorithm should dictate when specific tasks should be performed. It can be as detailed as assigning particular days to particular tasks.
HR and payroll professionals should sit with their accounting team and plan how tax prep activities should be done throughout the year. This will ensure a smoother year-end closing.
Assigning these tasks to management or team leads relieves you of the stress of doing it yourself. It also ensures that everything flows smoothly as managers instill the discipline needed to perform these tasks.
Each department has a year-end closing process. Unfortunately, a lot of these processes are undocumented. This can increase your stress during year-end closing.
To solve this, you should document your year-end closing process. This process should be specific and repeatable. This means that it should be reported enough that another employee could perform it.
For example, your year-end closing process should be documented enough that a new employee could perform a year-end closing in your accounting team. Documenting this year-end closing process also ensures that no steps are skipped.
That said, your year-end closing process should also be repeatable. This means that your accounting team should be able to use the same process every year.
- Gather Your Financial Statements
Gathering your financial documents for your year-end closing provides a lot of stress to business owners. It can be overwhelming to prepare everything from gathering financial records for the current tax year to preparing documents for the following year.
However, year-end closing will be a breeze if these documents are prepared throughout the year.
First, your tax team should determine which documents will be needed. Discussions should take place with accountants, auditors, and advisors to identify what documents will be required.
Next, establish when these documents should be gathered. For example, quarterly statements can be reconciled and filed before their deadlines. This provides the accountant with additional time to perform year-end closing.
- Review Your Employee Leave
Reviewing your employee leave enables you to eliminate stress from year-end closing. According to the IRS, employers must record and report all employee leave. Failing to report leave can incur costly penalties.
HR and payroll professionals should review leave balances throughout the year to avoid this problem. They can do this by examining leave balances each quarter. Management should understand that leave balances are scanned quarterly.
When employees submit leave requests, they can be instantly approved or denied. When leave is approved, the leave is recorded. If members of your company still have leave credits, you either need to provide the proper compensation for them or ask them to use the credits as needed. This encourages employees to use their PTO responsibly. This also prevents problems from escalating at the end of the year.
When leave is requested, the leave is automatically recorded to payroll. The leave is also visible to managers and payroll staff, helping them keep track of leave. Much like taking care of your skin, you want to be as thorough as possible regarding people’s paid time off.
- Organize all Records and Receipts While Eliminating Manual Processes
Organizing your receipts and documents for your year-end closing is just as important as preparing your documents. With a scheduled procedure, you can significantly reduce your time locating these documents.
Start by organizing your receipts. Receipts can be grouped into different categories. For example, you may group your receipts by location, department, or employee. Next, organize your documents. Documents can be arranged by type (e.g., contracts, purchase orders, or invoices).
Finally, store your documents. You can keep your documents in a cloud-based filing cabinet. Cloud-based storage makes storing and locating your records easy.
Year-end closing begins with doing away with manual processes in your payroll and HR systems. Manual processes contribute to stress. They lead to errors, employee dissatisfaction, and fines.
You can eliminate manual processes throughout the fiscal year. A great way of doing this is by automating your tax strategies. Payroll and HR software can help you automate your tax strategy. The same is true for timesheets. Timesheets should flow seamlessly from timesheet submission to payroll.
HR and payroll professionals can implement automated processes. Automation prevents last-minute sprints and stress.
- Address any Threats of Burnout to Your Accounting Team
Accounting teams get overwhelmed during year-end closing. This is primarily because of the many tasks their bodies need to perform.
To combat this stress, HR and payroll professionals should identify and address any threats to their accounting team. They should educate their accounting team. Explain that long hours and tight deadlines can lead to burnout. You can explain the toll stress can have on their health, family, and work performance.
You should also identify any threats to your accounting team’s productivity. Hazards to productivity include poor technology, insufficient resources, and poor management.
For example, if your accounting team is struggling to meet deadlines, it may be due to insufficient resources. To alleviate this, you should identify what help the accounting team needs to achieve peak productivity.
One way to empower your accounting team is by hiring the right people. You should hire people who believe in your company’s mission. This increases their sense of ownership.
Another way to empower your accounting team is by implementing a smooth year-end closing process. Payroll and HR software can help you implement such a process.
Your accounting team should also be trained on year-end closing. Your accounting team should have a good understanding of the year-end closing process. They should also be educated on best practices.
The Bottom Line
Year-end closing can be a nightmare for HR and payroll professionals. However, it doesn’t have to be. Implementing these tips throughout the year will make things easier for you. It will also help you prepare your business for year-end closing. By following these tips, you can say goodbye to the stresses of year-end closing.