This checklist walks through the year-end work that turns a chaotic tax season into a quiet one. It's organized by what to do in the last 60–90 days of the year, what to do in early January, and what to hand off to your CPA when it's time to file.
November–December (before year-end)
1. Catch up on monthly bookkeeping
If you've fallen behind during the year, now is the moment to catch up — not after January 1 when the work has compounded.
- All transactions categorized
- All bank and credit card accounts reconciled through the most recent month
- Outstanding items flagged for resolution
If you're more than two months behind, this is catch-up work that takes meaningful time. Plan accordingly.
2. Review accounts receivable
- Send statements to clients with outstanding balances
- Follow up on past-due invoices before year-end (better collection rates before the holidays)
- Identify uncollectible amounts that should be written off
- Confirm any deposits or retainers are categorized correctly
3. Review accounts payable
- Pay down outstanding bills you'd like to claim as expenses this year (if cash-basis)
- Make sure all vendor invoices for the year are recorded
- Resolve any old or disputed bills
4. Update fixed asset register
- Add any equipment, vehicles, or major purchases made during the year
- Note placed-in-service dates (matters for Section 179 and bonus depreciation)
- Remove any assets disposed of during the year
- Document any major improvements (vs. repairs — different tax treatment)
5. Reconcile inventory (if applicable)
- Physical count of inventory on hand
- Value at cost
- Reconcile against bookkeeping records
- Identify and write off obsolete or damaged inventory
6. Review contractor payments and W-9s
- Confirm you have W-9s on file for every contractor you paid
- Note which contractors crossed the 1099-NEC threshold ($600 for 2025 payments; $2,000 for 2026)
- Track down missing W-9s now — much harder to chase in January
- Remember: payments through PayPal, Venmo, Stripe, or credit card don't require 1099-NEC (the platform's 1099-K covers them)
7. Check payroll for the year
- Verify all employees are correctly classified (W-2 vs 1099)
- Review S-corp owner salary — is it reasonable for the year's profit level?
- Confirm year-end bonuses, taxable fringe benefits, and any owner withdrawals are accounted for
8. Strategic year-end moves
A few tax planning conversations worth having with your CPA before December 31:
- Equipment purchases. Section 179 and 100% bonus depreciation can wipe out significant taxable income.
- Retirement plan contributions. SEP-IRA, Solo 401(k), and SIMPLE plans have year-end and tax-filing deadlines.
- Charitable contributions (for businesses that give).
- Pre-paying expenses for the next year (in cash-basis businesses).
- Deferring income into the next year if appropriate.
These are CPA conversations — bookkeeping records support them, but the strategy is a separate conversation.
Early January (after year-end)
9. Reconcile December
- Final month's transactions categorized
- Bank and credit card statements reconciled through 12/31
- Outstanding items resolved
10. Issue 1099-NECs
Deadline: January 31 (for both the recipient copy and the IRS copy).
- 1099-NEC for every contractor over the threshold
- W-9 verification on each
- 10+ total information returns? E-filing is required
- Most accounting software handles 1099 generation; the IRS also offers free e-filing via IRIS
11. Year-end financial statements
Produce and review:
- Profit & Loss statement for the full year
- Balance Sheet as of December 31
- Cash flow statement for the year
Compare to prior years. Significant changes should make sense — and if they don't, that's a sign something in the books may be wrong.
12. Owner pay reconciliation
For S-corp owners specifically:
- Confirm reasonable salary was paid throughout the year
- Distributions are properly categorized as equity (not expense)
- W-2 will be issued by the same January 31 deadline
For sole props and LLCs:
- Owner draws categorized correctly as equity
- No draws being treated as expenses
13. Sales tax for Q4
If you collect sales tax, the Q4 return and payment are typically due January 20 (Florida) or similar deadlines elsewhere. Get it filed.
14. Year-end inventory adjustment
If you took inventory, post the adjusting entry to align cost of goods sold to actual sales.
What to hand off to your CPA
When your CPA is ready to file, they typically need:
- Year-end Profit & Loss statement
- Year-end Balance Sheet
- General ledger detail (or access to your accounting software)
- Bank and credit card statements for December (for final reconciliation verification)
- 1099-NECs issued to contractors
- 1099-NECs you received
- 1099-Ks you received (from payment processors)
- W-2s issued (if you have employees)
- Mileage logs and home office calculations (if applicable)
- Equipment and asset purchase records for the year
- Loan statements (interest and principal breakdown)
- Major business changes (new partners, asset sales, debt, etc.)
A bookkeeper handles getting all of this organized. A clean handoff saves your CPA hours and saves you money.
Common year-end mistakes
- Waiting until February to start reconciling December — by then, everything else is also overdue
- Missing 1099 deadlines because W-9s weren't on file
- Forgetting to track S-corp reasonable salary until year-end (too late to adjust)
- Not taking inventory for inventory-based businesses
- Skipping the strategic CPA conversation before December 31
- Dumping receipts into a folder without reconciling them to bookkeeping
- Discovering at tax time that books aren't usable for filing
What this looks like in practice
A small service business with one bank account, one credit card, three contractors, and clean monthly bookkeeping might spend 2–4 hours total on year-end work — most of it before December 31.
The same business with no monthly bookkeeping, mixed personal/business spending, missing W-9s, and no fixed asset records might spend 20–40 hours catching up before they can even start year-end procedures.
The difference is whether monthly bookkeeping happened during the year. (More on staying current vs. catch-up →)
Frequently asked questions
Mid-November is ideal. That gives you 6 weeks before December 31 to catch up on any backlog, run strategic tax planning conversations with your CPA, and make any year-end moves before the calendar closes. Starting in January is fine for the post-year-end tasks but too late for strategic moves.
Issue them as soon as possible. Late filing penalties apply per form ($60 for forms filed within 30 days late, $130 for forms filed up to August 1, and $340+ after). Late is much better than missing entirely.
For tax purposes, yes — the year ends 12/31 for calendar-year businesses (which is most small businesses). Some businesses run a fiscal year that ends at a different date, but the same logic applies: close the books, reconcile, produce statements.
That's a cleanup project, not a year-end checklist project. The work needs to happen in two phases: clean up the historical mess first, then run normal year-end procedures on the cleaned-up data.
Where to start
If your year-end approach has been "open the file in March and panic" — there's a much cleaner version of this. Year-end work in November and December turns tax season into a quiet handoff instead of a crisis.
SoFlo360 helps small business owners with both monthly bookkeeping that keeps year-end manageable, and catch-up/cleanup when the books haven't been touched all year. Spanish-friendly support is available for owners who'd rather handle financial conversations in Spanish.
Book a free consultation or learn more about our bookkeeping services.