Month-end close & reportingYear-End Close Checklist: December Prep So January Isn't a Disaster

January 4th. Somewhere, an owner is scrolling through 2,000 emails looking for a subcontractor's W-9 from last April. Their CPA has sent a polite second request. The coffee has gone cold. The subcontractor, meanwhile, has changed phone numbers.

Year-end accounting gets a reputation as a January problem. Most of it is really a December problem that nobody got around to.

This year end close checklist splits the work in two: what to do in December while people still answer email, and what to do in January once the statements arrive. One note before we start: ABFI doesn't prepare or file taxes. Your CPA makes the tax calls. This checklist is about getting the books accurate and organized so your CPA's work goes smoothly.

What does a year-end close actually involve?

A year-end close is your regular month-end close for December, plus a few extra steps that only happen once a year: counting things, confirming year totals, and getting the books ready for the CPA. If your month-end routine is solid, year end is mostly a slightly longer version of it. If it isn't, here's our month-end close checklist for small business to get the monthly habit in place first.

December: the first half of your year end close checklist

Do these before the holidays eat the second half of the month.

1. Close November completely, with reconciled bank and card accounts. Year end is much harder when two months are open at once.
2. Collect W-9 forms from every contractor you've paid this year. The 1099 filing itself is handled by your CPA or a filing service, but the books need contractor payments coded correctly and vendor details on file.
3. List every equipment, vehicle or software purchase over your capitalization threshold, with the date, cost and invoice. Our guide to fixed asset records explains what to track.
4. Review the A/R aging for invoices you'll probably never collect. Flag them and discuss with your CPA before writing anything off.
5. Confirm payroll year-to-date totals in the books match your payroll provider's reports.
6. Plan an inventory count for December 31 if you carry inventory. Yes, on New Year's Eve. Snacks help.
7. Make a list of any personal expenses that went through the business account, and any owner contributions or draws, so they're coded correctly.

January: year end closing entries and the lock

Once the December 31 statements arrive:

1. Reconcile every bank, credit card and loan account to its December 31 statement.
2. Reconcile the rest of the balance sheet: receivables, payables, payroll liabilities, prepaids and equity.
3. Post year end closing entries. In everyday bookkeeping, that phrase usually means the adjusting entries for December: accrued expenses (costs incurred but not yet billed), prepaid expenses, inventory adjustments from the count, and depreciation. QuickBooks moves the year's profit or loss into retained earnings for you automatically, so you don't need to post that entry by hand.
4. Split loan payments between principal and interest using the lender's year-end statement.
5. Review the full-year P&L by month. Look for months that look out of character, such as rent appearing twice or a missing insurance payment.
6. Set a closing date in your accounting software so nobody edits last year by accident.
7. Package the reports and support for your CPA.

A worked example: a landscaping company's December

Suppose you run a six-person landscaping company. In early December, a reviewer works through the prep list and finds:

• A $14,500 used truck purchase recorded as "Repairs and Maintenance." It belongs on the balance sheet as a fixed asset, with its purchase date and invoice attached. How it's depreciated for tax is the CPA's decision.
• $38,000 paid to five subcontractors. Two W-9s are missing. Emails go out on December 6, while those subcontractors are still between jobs and checking messages.
• A $3,200 invoice from March to a homeowner who moved. It goes on the list for the CPA conversation about writing it off.
• The payroll provider's annual wages are $412,600. The books show $409,850. The $2,750 gap is one December bonus run recorded only as a cash withdrawal. Reclassified.

All of this took about three hours in December. In January, the same four problems would have cost three weeks of email tag and a nervous call with the CPA.

Handing off to your CPA without the scramble

Your CPA needs a clean balance sheet, a full-year P&L, a fixed asset list, loan statements, payroll summaries and contractor totals. Some will ask for more. The checklist in how to prepare your books for your CPA walks through the full package.

This handoff is where a department structure earns its keep. A bookkeeper prepares, a controller reviews and closes the year (our controller services cover this), and someone coordinates directly with your CPA so questions get answered by the people who did the work. That's what our CPA coordination is for. We hand over organized records; your CPA handles the tax return.