Your Year-End Bookkeeping Checklist: What to Do Before December 31

As the year winds down, many business owners feel the pressure to tie up loose ends before the new year begins. Getting your bookkeeping in order before December 31 is crucial—not just to avoid surprises during tax season but to start the new year with clean, organized financial records.

Why Year-End Bookkeeping Matters

Proper year-end bookkeeping ensures you:

• Have accurate financial statements for tax filing and business decisions.

• Avoid penalties or interest from missed deadlines or incorrect filings.

• Identify opportunities for tax savings by reviewing deductions and expenses.

• Set the stage for smoother audits or financial reviews.

Your Year-End Bookkeeping Checklist

1. Reconcile Your Bank and Credit Card Accounts

   Make sure every transaction is accounted for and matches your statements. Any discrepancies should be investigated and resolved to avoid errors on your tax return.

2. Review Accounts Receivable and Payable

   Follow up on outstanding invoices and pay any bills due before year-end. This helps manage cash flow and ensures expenses are recorded in the correct tax year.

3. Categorize and Review Expenses

   Ensure all expenses are properly categorized to maximize deductible items. Look for any missed deductions like business travel, supplies, or office expenses.

4. Verify Payroll and Employee Information

   Confirm employee records are accurate, payroll taxes are paid, and employee benefits are properly recorded. This step is critical for issuing correct W2s and 1099s.

5. Inventory Check (if applicable)

   If your business holds inventory, perform a year-end count and adjust your records accordingly.

6. Prepare for 1099s and W2s

   Gather all necessary information on contractors and employees to prepare these forms early. Accurate reporting helps avoid IRS penalties.

7. Backup Your Financial Data

   Ensure your bookkeeping files and financial reports are securely backed up to prevent data loss.

Need Help Getting It Done?

Year-end cleanup can be time-consuming and overwhelming. Consider scheduling a bookkeeping review or cleanup service with a professional to ensure nothing is missed.

Free Resource: Bookkeeping Health Checklist

To help you stay on track, download our Bookkeeping Health Checklist—a step-by-step guide to making sure your books are ready for year-end. It includes reminders, tips, and common pitfalls to avoid.

Taking the time now to organize your books will save you stress, money, and headaches when tax season arrives—and give you clear financial insights to start the new year strong.