The calendar year is almost over, and your CPA will ask for your books soon after. A year-end close is the routine that turns a year of transactions into clean, reviewable records. Done in November and December, it is a few focused hours. Done in April, it is a scramble that costs billable time. Here are ten steps for US small businesses.
Before you start
Pick a cutoff date (usually December 31 for calendar-year businesses) and set aside time to work through the list. Open your bookkeeping software, bank and card portals, and your payroll and payment processor reports. If your records are already behind, start with our bookkeeping cleanup checklist and come back here.
Steps 1-4: Get the records accurate
- Reconcile every bank and credit card account. Match the software balance to the statement balance through the last day of the year. Investigate differences instead of plugging them.
- Clear uncategorized and “ask my accountant” items. Anything parked in a suspense or uncategorized account needs a real category before anyone can rely on your profit and loss statement.
- Review and recategorize expenses. Scan each expense category for outliers. Personal spending, owner draws and loan principal are common items that get coded as business expenses by mistake.
- Chase down missing receipts and documentation. List any large or unusual transactions without support. Pull receipts from email, vendor portals and card statements while they are still easy to find.
Steps 5-7: Money owed and money due
- Review accounts receivable. Follow up on unpaid invoices. Decide with your CPA whether any should be written off as uncollectible.
- Review accounts payable. Record bills that belong to this year even if you will pay them in January, if you use accrual accounting. Cash-basis businesses should confirm what counts under their method.
- Prepare 1099 information. Collect a W-9 from every contractor you paid. Total what you paid each person or business for services during the year, and confirm which payments fall under the current IRS reporting threshold. Payments by credit card or payment platform are generally reported by the processor instead, so check the IRS instructions or ask your CPA. Forms are generally due to recipients and the IRS in late January.
Steps 8-10: Close and hand off
- Check payroll and sales tax records. Confirm payroll reports tie to your books, and that sales tax collected and remitted matches what you recorded in each state where you file.
- Review fixed assets and year-end purchases. List equipment, vehicles or software bought this year with dates and costs. Your CPA decides on depreciation and deductions; your job is to hand over complete records.
- Run reports and hand off to your CPA. Export a profit and loss statement, balance sheet, general ledger, and your reconciliation reports, plus the 1099 list and asset list. Send a short note listing anything unusual so your CPA does not have to guess.
Why clean books save money
CPAs bill for their time. Handing over reconciled, categorized books means that time goes to tax planning and filing rather than detective work. If you are unsure who should do which part of this, our guide on bookkeeper vs. accountant vs. software lays out the division of labor.
Keep it from piling up next year
The easiest close is the one you do a little at a time. Monthly reconciliation, a habit of snapping receipts as you spend, and collecting W-9s before the first contractor payment turn year-end into a quick review. This post is general information, not tax or legal advice, so confirm thresholds, deadlines and accounting methods with a licensed professional.
Next step
Want help getting your books ready before your CPA calls? Book a free scoping call with Deskhand. We will look at where your books stand, tell you plainly what needs doing, and outline a predictable plan if you want hands-on help. Use the contact section on our homepage to get started.