As the calendar winds down and the holidays approach, most business owners are thinking about wrapping up the year, not wrapping their books. But getting your financial records organized now can make a huge difference come tax season. Whether you handle your own bookkeeping or work with an accounting professional, taking time to get your books in order before December 31 can save you time, money, and stress, not to mention help you spot opportunities for year-end deductions.
Here’s how to prepare your books before the new year and get a smooth head start on tax season.
1. Reconcile Your Bank and Credit Card Accounts
Start by making sure your bank statements, credit card statements, and bookkeeping records all match.
Reconciling ensures every deposit, expense, and payment is accounted for and helps identify:
- Missing transactions
- Duplicate entries
- Bank errors or unrecorded fees
Pro tip: Schedule regular reconciliations (monthly or quarterly) so you’re not facing a mountain of work at year-end.
2. Review and Categorize All Expenses
Go through your expense categories to make sure everything is labeled properly (ex: supplies, software, travel, utilities, etc.) Clean, organized categories not only simplify tax prep but also help identify potential deductions you might have missed. If you’ve paid for business expenses with personal funds (it happens!), record those properly so they’re included in your books.
3. Collect and Organize Receipts
Paper or digital, your receipts are your proof. The IRS requires documentation for business expenses, so make sure you’ve saved receipts for things like:
- Meals and travel
- Equipment or technological purchases
- Marketing and advertising costs
- Professional services
4. Update Your Accounts Receivable and Accounts Payable
Check that all outstanding invoices have been sent and follow up on any unpaid ones before year-end.
Likewise, review your accounts payable to ensure all vendor bills are entered and up to date. This step keeps your cash flow healthy and ensures your balance sheet reflects an accurate financial picture heading into the new year.
5. Review Payroll and Contractor Payments
If you have employees or 1099 contractors, double-check that all payments and tax withholdings are accurate. You’ll need this information to prepare W-2s and 1099 forms in January, so now’s the time to fix any errors before deadlines hit.
6. Schedule a Year-End Review with Your Accountant or Bookkeeper
A year-end financial review is your opportunity to:
- Spot deductions you might have missed
- Review profit and loss trends
- Discuss goals and tax strategies for next year
Your accountant can also help identify red flags or adjustments that will make tax filing much easier.
Start the New Year with a Clean Slate
The more organized your books are now, the easier it’ll be to:
- File taxes on time
- Make smart business decisions early in the year
- Set budgets and goals based on accurate financial data
Contact All About Businesses
Preparing your books before the new year isn’t just about being organized; it’s about positioning your business for success. You’ll head into tax season with confidence, knowing your numbers are accurate and your stress is minimized. At All About Businesses, we help business owners stay on top of their finances all year long — not just at tax time. Our bookkeeping and accounting services make year-end prep simple, accurate, and stress-free.
Ready to start the new year with clean books? Contact us today to schedule your year-end bookkeeping review.
