Year-end bookkeeping checklist before you file

Why close the books at year end?

Monthly bookkeeping keeps the numbers roughly right. Year-end closing makes them final. The year's figures go onto tax returns, forms sent to contractors and employees, and any statements a lender or buyer sees. Mistakes left in the books at year end are carried into all of them.

The year-end checklist

1. Record every transaction to December 31

   Bring in all bank, card and platform activity. Record payments received and bills paid in the right year, not the day they cleared if your method says otherwise.

2. Reconcile every account

   Bank, credit card, loan, PayPal, Stripe and marketplace balances must match their December 31 statements. Clear or explain every reconciling item.

3. Check what is owed to you and by you

   List unpaid customer invoices and unpaid bills. Write off debts that will never be collected if you use accrual accounting.

4. Count inventory

   Count stock on hand at year end, or take it from marketplace inventory reports, and value it at cost. The difference between opening and closing stock drives cost of goods sold.

5. Update the fixed asset list

   Add equipment bought during the year with date, cost and description. Remove anything sold or scrapped. Your accountant needs this for depreciation, Section 179 and bonus depreciation.

6. Total owner transactions

   Sum what owners put in and took out. For a foreign-owned single-member LLC, list each transfer with its date, because Form 5472 reports them.

7. Match payroll records

   Wages, withholding and payroll taxes in the books should agree with the quarterly Forms 941 and the W-2s you are about to issue.

8. Total contractor payments

   For each US contractor, total what you paid by bank transfer or check, and confirm you have a Form W-9. Payments by card or payment app are reported by the processor instead. See how to pay contractors and file their 1099s.

9. Reconcile sales tax

   Sales tax collected, as shown in the books, should agree with the returns filed. The balance owed should match what is due for the last period.

10. Check loans and interest

    Loan balances should match lender statements, with the year's interest recorded as an expense.

11. Review the profit and loss account line by line

    Look for odd balances, personal expenses, duplicated income, and categories that look too high or too low against last year.

12. Close and lock the year

    Set a closing date in the software so the year cannot be changed by accident.

What should you hand to whoever prepares the returns?

• Profit and loss account and balance sheet for the year.
• The reconciled December 31 statements for every account.
• The fixed asset additions and disposals list.
• Inventory count and valuation.
• Payroll summaries and copies of Forms 941, W-2 and W-3.
• Contractor totals and Forms 1099 filed, plus any 1099-K you received.
• Loan statements, vehicle mileage log and home office details if claimed.
• Records of estimated tax paid during the year.

Which deadlines depend on this work?

For tax year 2026, Forms W-2 and 1099-NEC are due February 1, 2027, because January 31 falls on a Sunday. Partnership and S corporation returns are due March 15, 2027, and individual and C corporation returns April 15, 2027. The full list is in US business tax deadlines.

What if the books are months behind?

Catch up month by month, oldest first, before attempting year-end. See catch-up bookkeeping.

What about saving tax before December 31?

That is a separate exercise, done before the year ends rather than after. See the year-end tax planning checklist.

This guide is general information. It is not tax or legal advice for your situation.