SteadyBooks

Year-End Bookkeeping Checklist for Small Businesses

The best time to get your books ready for year-end isn't December 31. It's now. The short answer: reconcile every account, clear out uncategorized transactions, separate owner money from business money, check who owes you and who you owe, gather contractor, loan, payroll and inventory details, then run your year-end reports and send one clean package to your tax preparer.

Starting in November gives you time to fix problems while statements, receipts and people are still easy to reach. Wait until spring, and every small question turns into a hunt. This checklist is bookkeeping groundwork, not tax advice. Anything about deductions, estimated payments or what you owe belongs with your tax preparer.

1. Reconcile every account through the latest statement

Reconciling means checking that your books match the statement, line by line. Do it through the most recent statement you have for:

  • Every business checking and savings account
  • Every business credit card
  • Payment apps that hold or move money, like Stripe, Square or PayPal
  • Any business loan or line of credit

If an account won't reach a $0.00 difference, look for a missing transaction, a duplicate or a wrong opening balance before you add any adjustment. Then reconcile November and December as soon as those statements arrive.

More than a few months behind? Read our guide on how to catch up on bookkeeping before tax time first.

2. Clear out uncategorized transactions

Most bookkeeping software has a holding spot for transactions nobody has sorted yet. In QuickBooks Online, they often sit in accounts called Uncategorized Income, Uncategorized Expense or Uncategorized Asset.

Give each one a real category. While you're there:

  • Match larger purchases to a receipt or invoice
  • Add a short memo to anything unusual, so you still remember what it was in April
  • Record transfers between your own accounts as transfers, not income or expenses
  • Keep a "questions for my tax preparer" list instead of guessing

3. Separate owner money from business money

Look for:

  • Money you put into the business recorded as income. It should be an owner contribution.
  • Money you took out recorded as an expense. It should be an owner draw, or payroll if that's how your tax preparer set it up.
  • Personal charges on the business card. Record them as owner draws.
  • Business expenses you paid personally. Record them with the right expense category and keep the receipt.

If you set up your books this year, our guide on setting up QuickBooks Online for a new LLC shows how to set up these owner accounts.

4. Review who owes you and who you owe

Run an accounts receivable aging report (who owes you) and an accounts payable aging report (who you owe).

  • Follow up on overdue customer invoices now, before the holidays
  • Check for payments applied to the wrong invoice or customer
  • Confirm that bills marked unpaid really are unpaid, and remove duplicates
  • Ask your tax preparer how to handle invoices you don't expect to collect

5. Collect contractor information

If you paid independent contractors this year, make sure you have a current Form W-9 on file for each one, with their legal name, address and taxpayer ID. Ask now, while people answer email quickly, instead of during the year-end rush.

Then run a report of what you paid each contractor this year, so it's ready when your tax preparer asks. They can tell you which contractors need a Form 1099 and when. Our article on bookkeeping for freelancers and 1099 contractors covers the basics from the contractor's side.

6. Check loans, assets and big purchases

  • Match each loan balance in your books to the lender's statement
  • Split loan payments between the loan balance and interest, if your lender shows the split
  • Save the invoice for any equipment, vehicle or other large purchase made this year
  • Note the date each one was bought and started being used

Your tax preparer decides how larger purchases are treated. Your job is to make sure the paperwork is complete and easy to find.

7. If you run payroll, review it now

If you have employees, compare your payroll reports with your books.

  • Year-to-date wages and payroll taxes in your books match your payroll provider's reports
  • Employee names and addresses are current, since year-end forms go to those addresses
  • Any bonuses or year-end payments are scheduled with enough time to process

8. Count inventory at year-end (if you sell products)

If you carry inventory, plan a physical count as close to December 31 as you can. Compare the count to what your books show and note any big differences. Ask your tax preparer how they want inventory reported.

9. Run your year-end reports and lock the year

Once December is reconciled, run and save:

  • Profit and loss for the full year
  • Balance sheet as of December 31
  • General ledger or transaction detail for the year
  • Accounts receivable and payable aging as of December 31

Read through them for anything that looks odd. Then set a closing date in your software. In QuickBooks Online, it's under Settings, then Account and settings, then Advanced. A closing date helps stop anyone from accidentally changing last year's numbers after you've handed them off.

10. Hand off to your tax preparer

Send your tax preparer one organized package:

  • The year-end reports from step 9
  • Year-end bank, card and loan statements
  • Contractor payment totals and W-9s
  • Payroll reports, if you have employees
  • Your "questions for my tax preparer" list

Ask ahead of time what else they need and how they'd like to receive it. That's what tax-preparer-ready books look like: complete, reconciled and easy to follow, so your tax preparer can focus on your taxes instead of sorting out your books.

Common questions

When should I start year-end bookkeeping?

In November, if you can. Work through the year so far now, then finish November and December once those statements arrive.

Does a bookkeeper file my taxes?

Not at SteadyBooks. We get your books tax-preparer-ready, and your tax preparer handles the filing and any tax questions.

Already behind? Start with one month

Don't try to do it all in one weekend. Pick one account, reconcile one month, and keep going in order. Progress adds up faster than you'd expect.

If you'd rather hand it off, SteadyBooks offers Tax-Ready by Feb 15: a flat $750 plus $150 for each month behind, with 50% paid upfront. Your books are delivered tax-preparer-ready by Feb 15. We work alongside your tax preparer and don't file taxes.

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