Year-End Bookkeeping Checklist: How to Prepare for Tax Time
Closing out the year doesn’t have to feel overwhelming. A little work in December can spare you a lot of stress once January rolls around. This checklist walks you through the key areas to review so you can wrap up the year with confidence and start the new one on solid footing.
Review All Account Activity
Take a slow, intentional pass through your transactions. Look for anything missing, duplicated, or sitting in the wrong category. This is also a good time to make sure vendors and customers have complete and accurate profiles.
Reconcile All Bank and Credit Card Accounts
Reconciliations are one of the biggest ways to catch errors before tax time. Make sure you reconcile:
- Bank accounts
- Credit cards
- PayPal, Venmo, Stripe, and Square
- Loans or lines of credit
If something doesn’t match, now is the best time to track it down.
Confirm Accounts Receivable
Look over your unpaid invoices and decide what still needs to be followed up on. This includes:
- Overdue invoices
- Customer deposits recorded correctly
- Any old balances to write off if they’re not collectible
Making sure your A/R is accurate helps your reports reflect a true picture of the year.
Review Accounts Payable
Double-check that all vendor bills for the year are entered and properly matched to payments. Watch for duplicates or checks entered twice. Keeping A/P clean helps avoid surprises later.
Clean Up Payroll Records
Payroll deserves an extra careful review. Confirm that employee information, addresses, pay types, and deductions are correct. Compare your year-to-date totals with your payroll reports so you’re ready for W-2s and any contractor 1099s.
Prepare for 1099s
If you work with contractors, now’s the time to get everything in order:
- Make sure you have W-9s on file
- Confirm addresses and tax IDs
- Review totals for non-employee compensation
Catching missing information early can save you a lot of scrambling in January.
Review Fixed Assets and Depreciation
Add any new assets you purchased during the year and remove anything you disposed of. If you’re unsure about depreciation schedules, you can confirm with your tax preparer.
Verify Inventory (If Applicable)
If you track inventory, perform a physical count and adjust your books to match what you actually have. It’s also a good time to clean up items you no longer use or sell.
Run Key Year-End Reports
Before closing the books, run these core reports:
- Profit & Loss
- Balance Sheet
- A/R Aging Summary
- A/P Aging Summary
- General Ledger
- Payroll Summary
Save PDFs of these reports for your records and share them with your tax professional.
Review Tax-Related Deductions and Planning
Make sure common items aren’t overlooked, such as:
- Mileage logs
- Home office expenses
- Retirement contributions
- Charitable donations
- Final estimated tax payments
A quick review can help you avoid missed deductions.
Close the Books (Optional but Highly Recommended)
Once everything looks good, close the books for the year. This prevents accidental changes to finalized numbers and protects your year-end reports. Adding a closing date password is an easy extra safeguard.
Set Up for the New Year
Before you finish, take a moment to set yourself up for a smoother start:
- Update recurring invoices
- Check for subscription or pricing changes
- Review your budget or financial goals
- Clean up your Chart of Accounts if needed
Final Thoughts
Year-end is much easier when you tackle it in December rather than waiting until January. A little preparation goes a long way in helping you begin the new year with clarity. And if you ever want help reviewing your books or handling the year-end close, support is always available.
