At the end of every year, tax preparation stimulates a frenzy of financial reporting, as companies submit fiscal year profit and loss reports (page 372) and balance sheets (page 376) as part of their tax returns. But tax forms aren't the only reason for year-end reports. Before you hand over your company file to your accountant or prepare final reports for your tax return, run yearend reports for these reasons, too:
Inspect year-end reports for funny numbers. They might mean that you posted a transaction to the wrong account or created a journal entry incorrectly.
Analyze your annual results to spot problems with your operations or look for ways to improve.
After you complete your initial review of the year-end reports and make any corrections to transactions, your accountant (if you work with one) is next in line to see your company file (page 390). If your accountant handles tax preparation, you don't have to produce additional year-end reports. However, if you prepare your company taxes, you'll generate another set of year-end reports after you've inspected your results and corrected any mistakes.
You'll need a Profit & Loss report for the entire fiscal year for your tax return. Individuals receive W-2s to show how much money they made in a year. For companies, the Profit & Loss report shows the net income for the year. Whether you're inspecting your report for accuracy or producing a report for taxes, here's ...