Year-End Bookkeeping Checklist for Small Businesses

Every January, the same panic hits small business owners: scrambling to find receipts, reconcile accounts, and get everything to the accountant before tax deadlines. It doesn't have to be this way.

A clean year-end close starts in October — not January. This checklist breaks down exactly what to do, when, so you close the books stress-free and walk into tax season prepared.

October: Preliminary Cleanup

Three months before year-end gives you time to fix issues without rushing.

Reconcile All Accounts

• [ ] Bank accounts — match every transaction in your ledger to bank statements, January through September
• [ ] Credit cards — same process, every statement
• [ ] PayPal / Stripe / payment processors — reconcile deposits to recorded revenue
• [ ] Petty cash — count physical cash and match to ledger balance

If you're using Holdings, reconciliation is automatic since your bank and accounting are the same system. Check the reconciliation dashboard for any flagged discrepancies.

Review Accounts Receivable

• [ ] Send reminders for outstanding invoices (especially 60+ days overdue)
• [ ] Identify uncollectible accounts for potential write-off
• [ ] Update customer contact info before year-end statements go out

Review Accounts Payable

• [ ] Pay outstanding bills before year-end to capture the deduction
• [ ] Verify vendor W-9s are on file for anyone you'll 1099
• [ ] Review recurring subscriptions — cancel anything unused

November: Categorization & Corrections

Expense Review

• [ ] Scan all transactions for proper categorization
• [ ] Reclassify any “Miscellaneous” or “Uncategorized” transactions
• [ ] Separate business vs. personal expenses (if any slipped through)
• [ ] Verify meals & entertainment are properly split (50% deductibility for most business meals)

Fixed Assets

• [ ] Log any equipment purchased during the year
• [ ] Calculate depreciation (straight-line or Section 179)
• [ ] Log any assets disposed of or sold
• [ ] Update your fixed asset register

Payroll Reconciliation

• [ ] Verify total wages paid match payroll reports
• [ ] Confirm all payroll tax deposits were made on time
• [ ] Review employee benefit deductions (health insurance, retirement contributions)
• [ ] Collect updated W-4s from employees with life changes

December: Final Adjustments

1099 Preparation

• [ ] Pull a report of all contractor payments >$600
• [ ] Verify W-9 information for each contractor
• [ ] Confirm mailing addresses (1099s must be mailed by January 31)
• [ ] File 1099-NEC for contractors, 1099-MISC for rent and other payments

Inventory (If Applicable)

• [ ] Physical inventory count
• [ ] Write off damaged or obsolete inventory
• [ ] Reconcile physical count to inventory records
• [ ] Calculate cost of goods sold (COGS)

Tax Planning

• [ ] Estimate annual income and tax liability
• [ ] Make Q4 estimated tax payment (due January 15)
• [ ] Consider timing of income and expenses for tax optimization
• [ ] Review retirement contribution limits (SEP-IRA, Solo 401k)
• [ ] Evaluate Section 179 deduction for equipment purchases

Prepaid Expenses

• [ ] Record any expenses paid in advance for next year
• [ ] Amortize prepaid insurance, rent, or subscriptions

January: Close & File

Final Reconciliation

• [ ] Reconcile all accounts through December 31
• [ ] Review year-end bank statement line by line
• [ ] Post all December accruals and adjustments

Generate Financial Statements

• [ ] Profit & Loss (Income Statement) for full year
• [ ] Balance Sheet as of December 31
• [ ] Cash Flow Statement
• [ ] Compare to prior year — flag any large variances for review

File Tax Forms

• [ ] 1099s mailed to contractors by January 31
• [ ] 1099s filed with IRS by January 31 (e-file) or February 28 (paper)
• [ ] W-2s distributed to employees by January 31
• [ ] W-2s filed with SSA by January 31

Deliver to Your CPA

• [ ] Complete financial statements
• [ ] Bank statements (all accounts, all months)
• [ ] Depreciation schedules
• [ ] Loan statements showing interest paid
• [ ] Vehicle mileage logs (if claiming auto deduction)
• [ ] Home office measurements (if claiming home office deduction)
• [ ] Charitable contribution receipts

For Nonprofits: Additional Year-End Steps

Nonprofits have extra requirements:

• [ ] Reconcile restricted vs. unrestricted fund balances
• [ ] Verify grant spending matches grant agreements
• [ ] Prepare donor acknowledgment letters (required for gifts >$250)
• [ ] Review compliance with any grant reporting deadlines
• [ ] Prepare data for Form 990 (due May 15 for calendar-year nonprofits)
• [ ] Board financial report for year-end board meeting

How Holdings Makes Year-End Easier

Most of the pain in year-end bookkeeping comes from reconciling your bank with your accounting software. When your bank IS your accounting software, half the checklist handles itself:

• Automatic reconciliation — transactions are categorized as they happen
• Real-time financial statements — P&L and balance sheet are always current
• Contractor tracking — payments to contractors are flagged for 1099 reporting
• Expense categorization — IRS categories applied automatically

You still need to review, but you're reviewing auto-categorized data instead of starting from raw bank statements.

Start your year-end close with Holdings →