Year-end is only painful when it is doing twelve months of work at once. If the monthly closes happened, this list is an afternoon.
Work down it in order. Several items depend on the ones above them.
Capture and reconcile
1. Every account connected and current. Including the dormant ones. Accounts nobody connected are accounts nobody reconciled.
2. December reconciled on every account. Bank, credit cards, loans, merchant and processor accounts. Genuinely reconciled, with no plug entry making a difference vanish.
3. Uncategorized cleared. Whatever holding account your software uses should be empty. If it holds anything material, those transactions are missing from your expense categories by an unknown amount.
Verify against outside documents
4. Loan balances confirmed with the lender. Year-end balance and total interest paid, per loan. This is the most reliably missing document and it affects both statements.
5. Payroll tied to the provider's filings. Annual totals from your payroll provider compared to what the books say. Differences get found now, not in March.
6. Sales tax collected versus remitted. The liability account should reflect only what is genuinely owed for the final period. A balance that only grows means remittances were coded somewhere else.
Adjust
7. Fixed assets listed. Anything substantial purchased during the year, with date and amount, in a schedule rather than buried in a general expense account. Your accountant decides the treatment; they can only decide about things they can see.
8. Owner draws and contributions separated. Recorded as equity movements, not income and expense.
9. Prepaid and deferred items reviewed. Annual insurance recognised across the months it covers. Customer prepayments still sitting in deferred revenue if the work is not delivered.
10. Inventory counted, if you hold it. A physical count compared to book inventory. The difference is shrinkage, and it is a number worth knowing.
Review and hand over
11. Balance sheet reviewed line by line. Every account either matches an external document or has an explanation. This is where the remaining errors live.
12. Lock the year. Once closed, close it. A file that keeps moving underneath your accountant means the work gets redone, and figures you have already reported quietly change.
The one extra thing
Not a checklist item, but worth more than most of them: a short note listing the year's unusual transactions. The insurance settlement, the equipment sold, the large refund, the loan that was refinanced.
Every business has five or six of these. Explaining them in December, while you remember, saves an expensive round of queries in March about a $22,000 deposit in August that nobody can place.
Timing
Aim to hand over in early February rather than late March. Not because the work is different, but because the environment is — every practice is at capacity in late March, and a file arriving then gets less attention and more extensions.
If working down this list reveals that the monthly closes did not actually happen, that is a cleanup rather than a year-end, and it is better to know in December than in March. And if you want next year to be an afternoon rather than a project, monthly bookkeeping is what makes items 1 through 11 already true on the 31st.
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