At a glance: A clean year‑end close comes down to three things: reconcile every account, pull a consistent set of reports, and package everything neatly for your tax preparer. Finish with a quick post‑close review so you start the new year with clear priorities.
Quick action: Copy the checklist and paste it into your task tool or spreadsheet.
For a true close, reconcile every balance sheet account that moves cash—or claims it does.
Bank accounts: Operating, savings, IOLTA/trust (if applicable), deposit/clearing accounts.
Credit cards & charge cards: Confirm statement‑end balances and unresolved transactions.
Loans/lines of credit: Tie GL balances to lender statements; record year‑end interest.
Suspense/“ask my accountant” buckets: Zero them out or add notes for your tax pro.
Tip: If a statement exists, reconcile it. If it doesn’t (e.g., intercompany or clearing), create a tie‑out schedule that shows how you got to the ending balance.
Export all reports for the same period (Jan 1–Dec 31) and as‑of 12/31 where noted.
Profit & Loss (P&L)
Balance Sheet – as of 12/31.
A/R Aging (as of 12/31) – review old receivables.
A/P Aging (as of 12/31) – confirm what’s actually payable.
Fixed asset additions/disposals – note large equipment or build‑outs.
Payroll annual totals – match to W‑2/W‑3.
1099's filed
Sales by state – important for multi‑state compliance and local filings.
Make it effortless to review:
One folder named YYYY_Tax_Package_{Company}.
File names like 2025_AF_Profit-and-Loss.pdf (YYYY_Client_ReportName).
Include a short cover note listing: accounting method (cash/accrual), software (QBO/Xero/Studio Designer), unusual items, and any open questions.
Why it matters: A tidy package prevents back‑and‑forth, reduces adjustments, and speeds filing—especially if you operate across multiple states or have complex procurement workflows.
Negative liabilities or inventory/WIP oddities: Usually a sign of mapping/posting errors.
Sales‑by‑state blind spots: Project work and installations can create filings outside HQ.
“Uncategorized expense” bloat: Add memos or categorize—don’t leave guesswork.
You don’t close the books to admire them—you close to make decisions. Block 30 minutes for this:
Profit drivers: Which projects, services, or client types produced outsized margin?
Problem accounts: Which expense lines or balance‑sheet items require cleanup?
Cash discipline: Are you enforcing retainers/milestones and net terms consistently?
Capacity & pricing: Did utilization stay healthy? Any projects under‑scoped or under‑priced?
Three‑by‑three: List 3 wins, 3 issues, and 3 actions for the next 90 days.
RECONCILE
[ ] All bank accounts (operating, savings, IOLTA/trust, deposit/clearing)
[ ] All credit/charge cards (match to statements)
[ ] Loans/lines of credit (GL ties to lender; record interest)
[ ] Suspense/“ask my accountant” accounts cleared or noted
[ ] Confirm Undeposited Funds are valid and will deposit in January.
REVIEW & CLEAN
[ ] Uncategorized transactions resolved (add memos if needed)
[ ] Old A/R addressed (collect, credit, or write off with notes)
[ ] A/P verified (close out duplicates; confirm vendor status and addresses)
[ ] Fixed asset changes recorded (additions, disposals, depreciation as applicable)
EXPORT (SAME PERIOD: 01/01–12/31; AS-OF 12/31 WHERE NOTED)
[ ] Profit & Loss (annual)
[ ] Balance Sheet (as of 12/31)
[ ] General Ledger (Full year)
[ ] Trial Balance (as of 12/31)
[ ] A/R Aging (as of 12/31)
[ ] A/P Aging (as of 12/31)
[ ] Payroll annual totals → match W‑2/W‑3
[ ] W‑9s on file
[ ] Sales by State (annual totals)
PACKAGE
[ ] One folder: "YYYY_Tax_Package_{Company}"
[ ] File naming: "YYYY_Client_ReportName.ext"
[ ] Cover note: accounting method, software, unusual items, open questions, index of attachments
POST‑CLOSE REVIEW (30 MIN)
[ ] 3 wins, 3 issues, 3 actions for next 90 days
↑ Copy the checklist and paste it into your task tool or spreadsheet.
What reports do I actually need to send to my tax preparer?
P&L, Balance Sheet, Trial Balance, General Ledger, A/R and A/P aging as of 12/31, Payroll W-3 and W-2's, 1099's filed, and sales‑by‑state totals. Add notes for any unusual transactions.
Do I need to reconcile credit cards and loans too?
Yes. Anything with a statement should be reconciled. For non‑statement balances (clearing or intercompany), include a tie‑out schedule.
Why “sales by state” for service firms?
Project work, installations, or on‑site services can create filing or reporting obligations outside your home state. A state‑level summary speeds compliance reviews.
What’s the fastest way to turn the close into action?
Use the 30‑minute review: identify 3 wins, 3 issues, and 3 actions that shape your next‑quarter priorities (cash discipline, pricing, capacity, and cleanup tasks).
Disclaimer: This article is for general education and may not reflect your specific facts. Consult your tax professional for advice.