How to Close Your Books for the Year (Simple Checklist)

Closing your books for the year doesn’t require complicated spreadsheets or accounting jargon. What you really need is a simple, straightforward checklist that gets your accounts wrapped up, cleaned up, and ready for tax season and the new year.

Here’s the clean, minimal, and practical version—no unnecessary steps, no overwhelm.

1. Reconcile Every Account (Yes, Every One)

This includes:

• all checking accounts

• savings accounts

• credit cards

• merchant accounts (Stripe, PayPal, Square)

• loan and line of credit accounts

Reconciliation confirms your books match your bank records.
If this step isn’t done, your numbers aren’t reliable.

2. Categorize All Transactions Through December

This is where 90% of year-end mess comes from.

Sort and clean up:

• software and subscriptions

• meals and travel

• supplies

• contractor payments

• advertising costs

• refunds or chargebacks

• loan interest

If something doesn’t clearly belong, tag it for review—don’t force a guess.

3. Match and Store All Receipts

Receipts matter for:

• tax deductions

• audits

• accurate classification

• large purchases (assets)

• travel documentation

Quick system:

• upload digital receipts

• take photos of paper ones

• store them in a “2025 Receipts” folder

• match high-dollar invoices to transactions

Missing receipts = missing deductions.

4. Review Accounts Receivable (A/R)

Identify:

• unpaid invoices

• overdue clients

• mistakes in invoicing

• payments that never hit your bank

Clean up old A/R now so you enter 2026 with a realistic cash picture.

5. Review Accounts Payable (A/P)

Check:

• vendor bills

• annual renewals

• auto-drafts

• payroll liabilities

• December tax payments

This helps you understand what still needs to be paid before year-end.

6. Verify Contractor Information for 1099s

If you paid any contractor $600+ in 2025, you must issue a 1099-NEC.

Make sure you have:

• completed W-9s

• correct payment totals

• legal business names

• mailing addresses

Don’t wait until January to chase this down.

7. Review and Update Your Fixed Asset List

If you purchased equipment, tools, furniture, or computers this year:

• confirm purchase dates

• attach invoices

• update depreciation schedule

• store documentation

Properly tracking assets ensures accurate tax treatment.

8. Adjust Inventory (If Applicable)

Count inventory and adjust for:

• shrinkage

• damaged goods

• returns

• year-end valuations

Accurate inventory = accurate cost of goods sold.

9. Run Your Year-End Financial Reports

At minimum, download:

• Profit & Loss (full year)

• Balance Sheet (as of Dec 31)

• A/R & A/P aging summaries

Save them in a “2025 Year-End” folder.

These are the reports your tax professional will need.

10. Note Any Questions or Irregularities

If something seems off, unclear, or inconsistent:

• mark it

• document it

• ask your bookkeeper or tax pro

A 5-minute question now prevents a 2-hour problem in March.

Final Thoughts

Closing your books doesn’t need to be stressful. With a simple checklist, a little organization, and clean documentation, you’ll enter 2026 with clarity—and your tax season will go a lot smoother.

Want your books closed for you? Book a Year-End Bookkeeping Session and we’ll handle your clean-up so you can start 2026 organized and stress-free.

The Money-Smart Business Blog provides educational content designed to help small business owners make informed decisions. This content is not tax, legal, or financial advice and should not be used as a substitute for personalized guidance. Always consult with a licensed professional before taking action based on this information.