Year-end processes for QuickBooks Part 2 Comparison Reports is the post on this topic. This 3-part series is of the tasks I perform on client files, typically quarterly or monthly. But it is very important to give the records a good look through at year-end.  

Comparing your records from 2021 to 2020 will not only help you to make sure your data is correctly assigned and categorized, but it can also help you know where you stand with your business in terms of profit and loss. It can help you see the accounts in which you spend the most money. A comparison of these figures year-over-year reveals trends across different aspects of your financials and how they fluctuate when it comes down to increase or decreases in revenue depending on factors like the economic climate, changes in consumer habits, or growth in specific areas that are directly or indirectly related to your industry sector as a whole such as consumer preferences, clientele, number of employees, etc.

Review the Balance Sheet comparison report

Look at this report with a lens of how you are doing. Did you purchase any new assets? Retire any old ones? These are things you need to look at. Additionally, you will want to add some receipts to the asset purchases along with any details of what was purchased in order to aid the CPA in calculating the depreciation at year-end.

Looking at credit card balances and comparing those from last year to this year. Are your balances higher at year-end 2021? It is a great way to see the “health” of a business. If you have a lot of debt on the books, maybe it is time to start to think about or implement a plan to pay it down.

Review the Profit and Loss comparison report

Looking at this report is where you can get into the nitty-gritty of thinking ahead.

What is my sales goal for 2021? Maybe create a budget with a goal. I like to think big here. Remember, however, increasing sales without looking at where you can decrease expenditures is foolish. When analyzing the data, you need to be thinking about where you can also reduce costs. Run leaner. This comparable report is great for just making sure things are in the right place first, and then looking more deeply as to where you would like to be at the end of 2022.

This was the last of the Year-End processes. But it really is just the beginning. I highly recommend reviewing, then analyzing the data, then creating a budget for 2022. Really look for places where you can cut costs. Look for ways to get more quality clients. Analyze your leads and the ones that became clients vs the ones that did not. Analyze the data by practice area. Both of these two things will help your business flourish. You may also want to see what your competitors are doing. Reach out/collaborate.

These are just a few of the things that you can do to help your client make smart financial decisions.

I hope this series helps you, as the attorney, grow your business or as the accountant or bookkeeper that services attorneys or law firm clients.

Stay tuned for some cool QuickBooks tips in the next article. We hope you enjoyed this article about how to use a balance sheet as an important tool in financial analysis. With this knowledge, you can use the balance sheet to compare prior periods. So what are you waiting for? Get started strategizing your books or your client’s records today!

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