A year-end accounting checklist for business owners

The end of the year is the last chance to make many decisions that affect this year’s taxes, and the start of the busiest stretch on the accounting calendar. A little organization in November and December makes January through April much calmer.

Before December 31: decisions and review

• Bring the books current. Year-end planning depends on knowing where the year actually stands. Reconcile accounts through at least October or November.
• Project the full year. Estimate profit and tax for the year so decisions are based on real numbers.
• Review timing of income and expenses. Depending on your accounting method and situation, when you bill, collect, or pay can affect which year income and deductions land in.
• Consider planned purchases. If you were already planning to buy equipment, the timing may matter. Buying something only for a deduction is rarely a good reason on its own.
• Review retirement contributions. Retirement plans have their own setup and contribution deadlines, and some fall earlier than you might expect. Review options while there’s still time to act on them.
• S corporation owners: check payroll. Make sure owner compensation for the year is reasonable and has been run through payroll.
• Check estimated payments. Confirm payments made so far and plan the January installment. See our guide to estimated taxes.

In January: gather and file

• Issue 1099s. Forms 1099-NEC for contractors are generally due to recipients and the IRS by January 31.
• Issue W-2s. Employee W-2s are also generally due by January 31.
• Close December. Reconcile every account through December 31, including loans and credit cards.
• Count inventory. If you carry inventory, a year-end count supports cost of goods sold.
• Review fixed assets. Record equipment purchased during the year and anything sold or disposed of.
• Collect year-end statements. Loan statements, payroll reports, and records for any accounts that don’t feed into your software.

Key filing dates to keep in mind

For calendar-year businesses, partnership and S corporation returns are generally due March 15, and individual and C corporation returns are generally due April 15. Extensions are available for filing, but generally not for paying tax that’s owed.

Make next year easier

The best time to fix a process is right after you’ve felt its pain. If this year’s close was a scramble, consider moving to a monthly close, setting aside tax reserves as you go, and scheduling a mid-year planning check-in. That’s the idea behind year-round tax planning.

This checklist is general information. Deadlines and rules can change — confirm specifics for your situation.