This blog takes small business owners through a year-end bookkeeping and accounting checklist in 20 steps. You will be able to understand what it does, reconciling accounts, checking out payroll, checking assets, viewing the financial statements, and collecting the documents for your accountant. It will help you understand bookkeeping and tax preparation, and outsourcing.
It is essential that the owner of the small business must be interested in doing year-end bookkeeping and accounting checklist because they would want to ensure that their financial transactions, accounts reconciliation, and reports analysis have been done and helps to maintain proper record keeping. Year-end closing of books is necessary for tax filing, but there is more to it than that because it talks about the profitability, cash flows, liabilities, and financial condition of the small business. Year-end bookkeeping checklist will prevent any frantic activity during end of year and will give solid numbers to your tax preparer. This year-end financial checklist will take you through four phases of year-end accounting tasks for small business.
Here’s a small business year-end bookkeeping and accounting checklist:
- Reconcile all bank, credit card and payment accounts.
- Check customer’s invoice and outstanding supplier’s bills.
- Review income, expenses, payroll and tax records.
- Check stock, assets, loans and equity.
- Review financial statements and put together a document package for your tax professional.
What is Year End Accounting Checklist?
A year-end accounting checklist is a list of bookkeeping and financial review activities that are performed to ensure that a business’s books are complete and accurate at the end of its accounting cycle. It suits:
- Owners/Sole Proprietors: Business activity is separated from personal activity.
- LLCs/Inc. Businesses: Assists with filing and equity balances.
- Employers or businesses that have employees or inventory or multiple accounts: More balances to check.
- For calendar or fiscal-year companies: Use it at the end of your period.
What are the 20 Steps in a Year End Accounting Checklist?
Phase 1 – Close and reconcile books
All income and expenses recorded
Enter missing sales and bills, and fix duplicates.
Make sure to confirm each and every bank account
Match books to statements and explain differences.
Pay off credit cards and business loans
Split loan payments between principal and interest; agree balances.
Re reconciliation payment processors and clearing accounts
Match receipts, fees, refunds and deposits.
Check Accounts Receivable and past due invoices
Review unpaid invoice, agree listing to the ledger.
Test accounts payable and overdue bills
Enter unpaid bills to suppliers, eliminate duplicate entries to suppliers.
Phase 2: Confirm expenses, payroll and business assets
Check expense categories and purchases that are made for the company
Correct miscoding and differentiate personal spending.
Verify presence of employees and students
Verify payroll, taxes, and liabilities against the accounting records.
Check on payment to contractors and vendor documentation
Gather W-9s as required, set up reporting records.
Take stock and do the value of the goods
Count stock and make adjustments to records and check for obsolete stock.
Fixed asset and depreciation ledger check
Acquisition and disposal of fixed assets for depreciation check.
Prepaid expense and accrued liability check
Prepaid and accrued expenses check with your Accountant.
Phase 3: Scrutineer financial statements and tax preparation documents
Analyze the Profit & Loss Statement
Investigate unusual changes and compare to previous period.
Balance sheet is reviewed
Reaffirm asset, liability and equity of the owner balances.
Review Cash Flow, Working Capital
Compare timing of collection and payment against cash needs.
Covers examination of tax records and adjustments
List questions, and bookkeeping categories are not deductible.
Phase 4 – Finalize, and prepare for following year
Gather up the year-end file package
Collect statements, reports, schedules and financial statements.
Answer any bookkeeping queries
Remove and record unresolved differences, if there are any, in uncategorized items.
Evaluate accounting system and access controls
Review permissions and backups; look at locking.
Make financial goals and bookkeeping plan
Establish deadlines, budgets and review dates for set recon.
What Does a Working End of Year Checklist Appear Like?
- Note missing income and expenses
- Reconcile bank accounts
- Pay credit card bills and loans
- Reconcile payment processors
- Review accounts receivable
- Review accounts payable
- Check expense categories
- Review contractor records
- Audit stock and real estate
- Examine prepaid expenses and accruals
- Profit and loss statement analysis
- Difference between balance sheet and cash flow
- Organize tax documents
- Clear up any bookkeeping issues
- Schedule next year’s bookkeeping
What Documents Do Small Businesses Need for Year-End Accounting?
| Document | Why it matters |
| Bank and credit card statements | Verify balances and transactions |
| Sales invoices and receipts | Support recorded revenue |
| Vendor bills and invoices | Support expense transactions |
| Payroll records | Reconcile payroll, taxes, and liabilities |
| Contractor payment records | Review vendor payments and reporting |
| Loan statements | Confirm outstanding principal and interest |
| Inventory records | Support quantity and valuation reviews |
| Fixed asset records | Support asset and depreciation schedules |
| Prior-year financial statements | Compare performance and opening balances |
The IRS advises keeping records that support reported income and expenses, including invoices, receipts, paid bills, and deposit information.
What’s the difference between year end bookkeeping and year end tax preparation?
- Year-end bookkeeping largely includes closing out accounting entries, balancing accounts, reviewing account balances, and preparing financial statements.
- Year-end tax preparations include applying tax law and preparing all required tax documents.
Though proper bookkeeping will assist you in completing the list of tasks required at year-end tax preparations for your small business, it shouldn’t replace professional tax assistance.
At what point is it time for a small business to hire out its Year-End Bookkeeping duties?
- Books are behind: Months of entries are not recorded.
- Unresolved reconciliations: Differences persist – not explained.
- Complex accounts: Several payment processors, banks or loans.
- Complicated closing: Payroll, inventory, or fixed assets have work added.
- Limited capacity: Statements needed, little time.
Velan’s year end bookkeeping and ongoing support can help you catch up, reconcile books and prepare statements.
What’s Your Next Step?
This checklist helps to streamline the year-end closing process for small businesses. Velan bookkeeping also provides expert bookkeeping services to ensure that your books are in order and ready for your accountant’s review.
Frequently Asked Questions
What should be included on the checklist for a small business at the end of the year?
This includes documentation of transactions, account reconciliation, analysis of businesses receivables, payables, payroll, inventory, assets and financial statements and the preparation of documentation for your tax professional.
What is the procedure for closing the books on my small business at the end of the year?
Document every transaction, reconcile all accounts up to the closing date, clear up any discrepancies, and go over the profit and loss, and balance sheet.
When is the right time for a small business to have year-end bookkeeping?
Begin before the end of the period and conclude early, to have problems reported prior to tax deadlines.
Which financial statements are important for a small business to have at year end?
Profit & loss statement and balance sheet at least, and a cash flow review.
What documents do I need to give my accountant at the end of the year?
Bank statements, credit card statements, loan statements, sales and expenses summaries, aging schedule, payroll report, contractors report, inventory list.
Before tax season, does your small business have to reconcile accounts?
Yes. With reconciled accounts, the figures you record are correct, so your tax professional will have the right numbers.
What steps should I take to ensure the setup of AR and AP at year end?
Check and reconcile outstanding invoices and bills, pay and credit accounts, delete duplicate invoices and bills.
What is the difference between tax preparation and year-end accounting?
Year-end accounting ties up records and reports. Tax preparation is the application of tax rules and filing of tax returns. Even though clean books are useful, they cannot replace seeking professional tax advice.
What would the owner of a small business have to consider before December 31?
Consider unrecorded transactions, reconciliation, open invoices and bills, payroll, inventory, and cash needs.
Do bookkeepers prepare year-end financial statements?
Yes. A bookkeeper can reconcile, fix categories and create statements and document packages for an accountant’s review.
Our Bookkeeping Experts are here to help.
