The Final Stitch: Year-End Accounting Strategies for Interior Designers

The end of the year means one thing for design accountants and bookkeepers: closing out the books. Finalizing and completing all transactions and activities for the fiscal year, confirming the accuracy of all financial records, reconciling accounts, tracking down missing payments, and balancing the books are all part of this year-end accounting. It’s a process that’s absolutely crucial for accurate financial reporting, tax compliance, and overall financial health of your design firm.

If you’re using Studio Designer, you’ll know that you can keep two years’ worth of accounting open at most, so it’s imperative to wrap things up in time. Caroline Van Wassenhove, a certified public accountant located in Chicago, is the creator of CVW Accounting, which specializes in providing services to small businesses, all with a primary focus on the interior design sector. She knows the ins and the outs of the software, and how to use it to get the job done — all with some time to spare for holiday parties, shopping, or simply putting up your no-doubt-tired feet! Van Wassenhove shares a helpful checklist — and her hard-won advice — for making sure you’re not falling into any of the typical end-of-year traps.

“Common mistakes include not performing the following tasks prior to year-end close,” she shares, noting her full to-do list.

Which have you tackled?

• Confirm the prior year ending Trial Balance ties to the tax return to ensure nothing has been mistakenly recorded in the prior year;
• Record prior year Depreciation and Tax Adjusting entries prior to closing the prior year books;
• Account for business-related expenses paid with personal funds;
• Common expenses include: Telephone; Internet; Auto Expenses; Meals; Subscriptions; and Travel Expenses
• Account for qualified home office expenses (if applicable) which may include: Utilities; Insurance; Mortgage Interest or Rent; Repairs & Maintenance; Depreciation
• Account for business-related mileage (if electing mileage vs actual expense method)
• Invoice timely
• Clear Suspense / Uncategorized account to $0
• Accrue expenses in the year they are incurred (if filing accrual basis)
• Write off uncollectible invoices
• Reconcile W2 Previews to Payroll General Ledger accounts
• Account for officer health insurance on W2 (if applicable)
• Perform inventory count (if applicable) and adjust as necessary
• Identify which fixed assets (if any) have either reached the end of their useful life or are no longer in use and adjust as necessary
• Request W9s from 1099 vendors

While the process may be a chaotic, end-of-calendar one for many, Van Wassenhove and her team are in fact hard at work throughout the year to ease the experience. “We close out each month through the following tasks in Studio Designer,” she shares, noting her monthly responsibilities using the software: “Reconcile all Bank and Credit Card accounts. Review Accounts Receivable & Accounts Payable. Review Client & Vendor Deposits (items not yet invoiced). Review Inventory. Review all other Balance Sheet Accounts. Review Income Statement. Record W9 information for 1099 vendors.”

It may seem like a lot of work, but that old Benjamin Franklin adage, “An ounce of prevention is worth a pound of cure,” is particularly relevant in this accountant’s office. Her measured approach is one of the reasons her team is on target. “We establish deadlines, we share best practices, we have consistent procedures in place, and we implement internal controls to streamline our process,” says Van Wassenhove, who attributes her team’s efficiency to a blend of communication, organization, and timeliness. “We utilize checklists to ensure our team completes all necessary tasks by the deadlines,” she explains. “We update the books often and regularly throughout the year. We communicate often and regularly amongst our team and with our clients. We meet our deadlines and close out each month — we do not carry over unfinished tasks to the following month.”

Caroline’s Favorite Studio Designer Features

Key reports include: Trial Balance; Balance Sheet; Income Statement; Accounts Receivable; Accounts Payable; Client Deposits; Vendor Deposits; and Custom Reporting.