Year-End Bookkeeping Checklist for Small Businesses

As the year draws to a close, it's crucial for small businesses to ensure Their financials are in perfect order. Taking these steps now can set you up for tax season success and provide valuable insights to start the new year on solid ground. Here’s a comprehensive checklist to help you close out 2024 with confidence!

1. Reconcile All Accounts

• Why: Reconciling your accounts ensures that every dollar spent or earned is accurately reflected in your books, helping you avoid discrepancies when tax season rolls around.

•  How: Compare your bank statements, credit card statements, and business transactions to your accounting records. Ensure that everything lines up and that you’ve accounted for any bank fees, interest, or other adjustments.

2. Categorize All Business Expenses

• Why: Properly categorizing expenses helps maximize deductions and gives you a clearer picture of where your money is going.

•  How: Review each expense and make sure it’s correctly classified—such as travel, office supplies, software, or marketing. If you’re unsure about any category, consult with a bookkeeping professional to avoid potential misclassifications.

3. Review Outstanding Invoices and Accounts Receivable

• Why: Tracking outstanding invoices improves cash flow and ensures all revenue is accounted for before year-end.

•  How: Send reminders for any unpaid invoices, and consider whether you need to write off any uncollectible accounts. You may also want to encourage clients to pay their balances before December 31st for a clean slate in 2025.

4. Organize Receipts and Supporting Documents

• Why: Proper documentation is essential for tax season and can support deductions if you’re ever audited.

•  How: Ensure you have receipts or digital records for all significant expenses. If you’re going paperless, scan and categorize receipts by type and date. A document management system or even a simple cloud storage setup can make this task more manageable.

5. Verify Payroll Records

• Why: Accurate payroll records are essential to avoid issues with the IRS and ensure proper tax reporting.

•  How: Review your payroll to make sure all employees’ wages, benefits, and withholdings are correct. This is also a good time to verify employee information to prepare for W-2 filings in January.

6. Calculate and Record Depreciation

• Why: Depreciation on business assets can reduce your taxable income and provide a more accurate picture of your financial standing.

•  How: Update your records with any new assets purchased this year, and review your depreciation schedules for existing assets. Talk to your accountant or bookkeeper if you’re unsure about how to record depreciation for tax purposes.

7. Update Your Inventory Records

• Why: An accurate inventory count can impact your Cost of Goods Sold (COGS) and, subsequently, your taxable income.

•  How: Conduct a physical inventory count before the end of the year. Adjust your records to reflect current inventory values and write off any unsellable or obsolete items.

8. Review Financial Statements

• Why: Financial statements provide a snapshot of your business’s financial health and are invaluable for planning and tax preparation.

•  How: Analyze your profit and loss statement, balance sheet, and cash flow statement. These can help you identify any last-minute adjustments and give you a clearer idea of your tax obligations.

9. Prepare for 1099s and Other Tax Forms

• Why: Any contractors or freelancers who’ve been paid $600 or more in 2024 will need a 1099 form by January 31.

•  How: Ensure you have W-9 forms on file for each contractor and prepare to send out 1099s in January. Staying on top of this now will save you time and stress next year.

10. Schedule a Year-End Review with a Bookkeeper

• Why: A year-end review with a professional can help you spot areas for improvement and uncover potential tax savings.

• How: Schedule a consultation with Lakefront Bookkeeping for a comprehensive review of your financials. We’ll ensure your records are accurate, complete, and ready for tax season, so you can start 2025 focused on growth.

Get Year-End Ready with Lakefront Bookkeeping!

Preparing for the end of the year can feel overwhelming, but Lakefront Bookkeeping is here to make the process simple and stress-free. From reconciliations to tax prep, we’ll handle the details so you can focus on what matters most—growing your business.