Year-End Bookkeeping Checklist: What You Should Do Before December 31

As the year winds down, your books become more than numbers—they become the story of how well your business actually performed. Clean records help you avoid tax-season surprises, highlight what worked (and what didn’t), and give you a firm financial baseline heading into the new year.



If you want a smooth close, this checklist walks you through the essentials. No fluff. No technical terms overload. Just the practical steps every business should lock in before December 31.

Reconcile Every Bank, Credit Card & Loan Account

This is the first place financial problems show up. If your statements don’t line up with your accounting records, something’s off.

Take time to verify:

• Bank accounts
  
• Credit cards
  
• Merchant deposits
  
• Business loans or credit lines

You’re looking for duplicates, missing entries, or timing differences. Catching issues now prevents a lot of head-scratching in tax season.

Review Unpaid Invoices & Chase the Stragglers

Outstanding invoices might look fine on paper, but they impact cash flow and distort your year-end numbers.

Do a quick sweep of:

• Unpaid invoices
  
• Partially paid invoices
  
• Customers with frequent delays



Send friendly reminders and decide which invoices should be written off. Cleaning this up ensures your income reflects reality—not wishful thinking.

Enter All Bills & Update Your Payables

A lot of expenses slip through the cracks in Q4—subscriptions, renewals, vendor bills, reimbursements, and last-minute purchases.

Take stock of:

• Unentered bills
  
• Vendor balances
  
• Prepaid expenses (insurance, rent, annual software plans)
  
• Expenses you’ve incurred but not yet been billed for



Accurate payables mean you capture every deduction you’re entitled to.

Double-Check Payroll & Contractor Payments

Payroll mistakes create compliance headaches fast. Year-end is the best time to review everything.

Confirm:

• Employee details (names, addresses, withholding updates)
  
• Year-end bonuses
  
• PTO payouts
  
• Fringe benefits
  
• Contractor totals for 1099-NEC reporting



If you paid a contractor $600 or more, make sure you have a W-9 from them. You’ll thank yourself later.

Record Equipment & Asset Purchases

If you bought anything long-term—computers, tools, furniture, vehicles—it needs to be recorded properly.

You’ll want to:

• Log the asset
  
• Assign the correct category
  
• Update depreciation
  
• Review Section 179 and bonus depreciation options



A quick conversation with your CPA here can put real money back in your pocket.

Count and Value Your Inventory

If you sell physical products, a physical inventory count is mandatory—not optional.

Check for:

• Quantity differences
  
• Damaged items
  
• Expired or obsolete stock
  
• Adjustments that impact your cost of goods sold



Accurate inventory ensures your financial statements—and taxes—reflect the true cost of operations.

Review Loans, Interest & Outstanding Balances

Business owners often mix these up in books. Make sure every loan reflects the correct split between principal and interest.

Review:

• Loan statements
  
• Lines of credit
  
• Interest totals
  
• Remaining balances



Incorrect loan entries create messy balance sheets and incorrect deductions.

Organize Receipts & Documentation

If paperwork is scattered, now’s the time to clean it up. It protects you during tax prep—and even more during audits.

Aim to:

• Digitize physical receipts
  
• Attach receipts to transactions in your accounting software
  
• Tag documents clearly
  
• Remove duplicates

The goal is simple: If your CPA asks for proof, you shouldn’t have to dig.

Clean Up Your Chart of Accounts

If your chart of accounts feels chaotic, year-end is the perfect time to streamline it.

Look for:

• Duplicate categories
  
• Accounts you no longer use
  
• Catch-all buckets that should be broken down
  
• Outdated naming



A clean structure makes your reports easier to interpret and improves decision-making.

Verify Sales Tax & Compliance Obligations

Sales tax mistakes snowball faster than almost any other issue.

Confirm:

• Collected sales tax matches what you reported
  
• Use tax is accounted for
  
• Local or state requirements are met before deadlines



If something looks off, fix it before filings roll around.

Review Your Core Financial Statements

Before handing your books to your CPA, look at the big picture.

Review your:

• Profit & Loss Statement
  
• Balance Sheet
  
• Cash Flow Statement



You’re checking for numbers that feel wrong, accounts that look inflated, or categories that need reclassification. If something seems off, it usually is.

Schedule a Year-End Meeting With Your CPA

Waiting until January leaves money on the table. Many tax-saving moves must be made before the year closes.

A proactive year-end check-in helps you:

• Clarify tax liabilities
  
• Plan estimated tax payments
  
• Identify last-minute deductions
  
• Make adjustments before deadlines hit



This meeting alone can save you thousands.

Closing Thoughts

Year-end bookkeeping isn’t busywork—it’s the strategic reset your business needs. Clean books give you clarity, protect you during tax season, and help you make smarter decisions going into the new year. If the process feels overwhelming or you need a professional cleanup, Straight Talk CPAs can take the load off and get your books in top shape before December 31.