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January 15, 2019

Year-End Accounting, Planning and Preparation

Posted by Scott Schwartz

Year-End AccountingIt’s that time of the year where you need to close out your year-end processes and plan for the new year. There are a lot of moving pieces, so to help keep you on track, here are 6 topics we recommend keeping in mind:

1. Due Dates

According to our experts, these 5 key dates should be on your calendar:

  • January 31st, 2019
    • W-2/W-3
    • 1099-Box 7
    • 1099-All Other Boxes (Due to recipients)
    • 1921/1922 (Due to Recipients)
  • February 25th, 2019
    • 1095-C and 10995-B (Due to IRS if filing paper)
  • February 28th, 2019
    • 1099-All Other Boxes (Due to IRS if filing paper)
    • 3921/3922 (Due to IRS if filing paper)
  • March 4th,2019
    • 1095-C and 1095-B due to recipients
  • April 1st,2019
    • 1099-All Other Boxes (If filing electronically, if not see above)
    • 3921/3922-Due to the IRS (If filing electronically, if not see above)
    • 1095-C and 1095-B (If filing electronically, if not see above)

2. Filing Penalties & Risk

The important thing to keep in mind here is the penalties you’ll pay if you fail to file W-2s on time. The amount of the penalty is based on when you file the correct Form W-2. The penalty amounts shown below apply for filings due after December 31, 2017. The penalties are:

  • $50 (was $30) per Form W-2 if you correctly file within 30 days of the due date; the maximum penalty is $536,000 per year ($187,500 for small businesses).
  • $100 (was $60) per Form W-2 if you correctly file more than 30 days after the due date but by August 1; the maximum penalty is $1,609,000 per year ($536,000 for small businesses).
  • $260 (same) per Form W-2 if you file after August 1, do not file corrections, or do not file required Forms W-2; the maximum penalty is $3,218,500 per year ($1,072,500 for small businesses).

3. Cloud Applications

If you aren’t utilizing cloud applications for your organization’s back office, you’re behind the curve and creating risk. The cloud offers encryption and security that has far surpassed any data security provided by desktop applications. This isn’t just about accounting applications. There are HR, CRM, payroll, and file sharing applications that are cloud-based as well. The more you can put into the cloud, the less risk for your business from chance of potential data breaches. We strongly recommend adding implementing cloud applications to your 2019 plan if you haven’t already.

4. Documenting Key Procedures

When in doubt, it’s in your best interest to have procedures documented. As to which ones, we have a couple of recommendations to get you started:

  • Order to Cash
  • Process-Revenue Recognition
  • Contra-Revenue
  • Acquire to Retire for Tangible Assets
  • Tracking Budget to Actual on Rolling Basis
  • Ability to Re-forecast When Necessary for Your Business
  • Managing Cash Flow, Investments, and Compensation Dilution

5. Adopting New Guidance

There are some new compliance requirements your organization will need to adopt whether you are for-profit or not-for-profit. The dates below show the due dates to adopt these new rules.

  • ASC 606- Revenue Recognition
    • Private Org: Dec 15, 2018
    • Public Org: Dec 15, 2017
  • ASC 842 – Lease Accounting
    • Private Org: Dec 15, 2019
    • Public Org: Dec 15, 2018
  • ASU 2018-07 – Share-Based Compensation
    • Private Org: Dec 15, 2019
    • Public Org: Dec 15, 2018
  • ASU 2016-14 – Nonprofit Standard
    • Private Org & Public Org: Dec 15, 2017

6. Equity Compensation

When managing equity compensations, keep in mind these three categories.

Valuation

  • Are your projections defensible and aligned?
  • Are companies within your peer group all still public? Are they still relevant? This is key when talking about peer group volatility.
  • What’s the projected time to liquidity?

Equity Grants:

  • Forfeiture rate – Are you still applying one?
  • What is the expected term? Has it changed? We recommend you review this at least once a year
  • Volatility – Review and update peer group as necessary for both private and public companies.
  • Valuation/Amortization Elections

Liability-Classified Instruments

  • Make sure that you revalue them at year-end

If you would like to learn more about how to successfully wrap up 2018 and start 2019 with a solid plan, contact one of our experts today and make sure to check out our webinar “Year End Accounting, Planning and Preparation.

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