Tax season exposes every shortcut your books took during the year. Unmatched transactions, missing receipts and miscategorized expenses turn a simple filing into a scramble, and they cost you billable hours with your accountant. This small business bookkeeping checklist walks through the cleanup in a sensible order so your records are ready well before the deadline.
1. Reconcile every account
Start with the foundation. Reconcile each bank account, credit card and payment processor (Stripe, PayPal, Square) against your accounting software through the end of the tax year.
- Match every statement ending balance to your books.
- Investigate any difference, however small, before moving on.
- Clear stale uncleared checks and duplicate entries.
- Confirm that transfers between your own accounts are recorded as transfers, not income or expenses.
If you have months of unreconciled history, work oldest to newest. Errors compound, and fixing January first often resolves problems that appear in March.
2. Clear uncategorized and miscategorized transactions
Open your uncategorized or “ask my accountant” bucket and bring it to zero. Then scan the profit and loss report for categories that look off.
- Look for personal expenses run through the business account. Record them as owner draws or distributions, not business costs.
- Check that loan payments are split between principal and interest.
- Make sure equipment purchases are tracked separately from everyday supplies.
- Review the “miscellaneous” category. A large balance there is a red flag.
3. Gather missing receipts and documentation
The IRS expects records that support your deductions. Pull together receipts and invoices for larger expenses first, since those matter most in an audit.
- Export receipts from email and vendor portals.
- Attach documents to transactions in your software, or store them in a clearly named folder by year and month.
- Note the business purpose for meals, travel and any mixed-use expenses.
- Keep mileage logs if you deduct vehicle use.
4. Review accounts receivable and payable
Open invoices affect what you report. Run an aging report for both sides.
- Follow up on overdue customer invoices, and decide whether any are uncollectible.
- Confirm that bills you owe are entered in the correct period.
- Make sure income is recorded consistently with your accounting method (cash or accrual).
5. Check payroll and contractor records
Payroll and contractor paperwork has firm deadlines, so verify it early.
- Reconcile payroll reports to your books, including taxes withheld and deposited.
- Collect a W-9 from every contractor you paid. Confirm who needs a 1099-NEC, which generally goes out by January 31.
- Confirm that year-end W-2 totals match your payroll records.
6. Verify sales tax and other filings
If you collect sales tax, confirm that collected amounts match what you remitted and that every state return was filed. Rules vary by state, so check with your state revenue department or your accountant for thresholds and deadlines.
7. Review fixed assets and inventory
Record new equipment purchases and disposals. If you hold inventory, complete a year-end count and compare it to your books. Your accountant can advise on depreciation and any available deductions.
8. Run your year-end reports
Once the steps above are done, generate the reports your accountant or tax preparer will ask for:
- Profit and loss for the full year
- Balance sheet as of year end
- General ledger or transaction detail
- Accounts receivable and payable aging
- Payroll summaries and 1099 list
Read them with a critical eye. Does revenue match what you deposited? Do expenses look reasonable compared with last year? Anything surprising deserves a second look before you hand it over.
Don’t have time to do it all yourself?
Cleanup is tedious but very doable, and it is a common task to hand off. Many owners delegate recurring bookkeeping to a reliable remote professional. If you’re considering that route, our guide on how to hire a virtual assistant covers what to delegate, what to look for and how to get started safely.
Keep it clean all year
The easiest cleanup is the one you never need. Set a weekly 30-minute routine to categorize transactions and a monthly reconciliation. By next tax season, most of this checklist will already be done.
Want this in a printable format? Visit the Deskhand homepage and sign up to get our bookkeeping cleanup checklist.
This article is general information, not tax or legal advice. Consult a qualified CPA or tax professional about your situation.