Guide · Month-end close
Year-end close checklist for bookkeeping firms
The year-end close is a month-end close with more at stake: the numbers go to the tax preparer, the lender and the owner's plans for next year. This checklist covers what to ask clients before the year ends, what to check in the books, and how to hand over a clean year.
Before the year ends
Send a year-end questionnaire in the fall.
Ask about new assets, loans, vehicles, contractors, inventory and anything unusual.
Check every contractor has a W-9.
It saves the January scramble for Form 1099 preparation.
Agree the timeline.
Tell each client when you need their documents and when the books will be ready for their tax preparer.
Plan the workload.
Stagger clients by deadline and complexity, as you would for a monthly close.
The year-end checklist for each client
Close the final month.
Finish the normal month-end close first.
Reconcile every account to its year-end statement.
Bank, card, loan and clearing accounts.
Review receivables.
Follow up on old open invoices and agree with the client which, if any, to write off.
Review payables.
Clear duplicate bills and payments that were never applied.
Check fixed assets.
Record new assets and disposals, and the depreciation the tax preparer or client asks for.
Split loan payments.
Record each payment as interest and principal, and make sure each loan's balance matches the lender's statement.
Count inventory, if the client holds any.
Adjust the books to the count.
Review payroll and sales tax.
Compare the year's liabilities with the filings and payments.
Prepare the contractor list.
Total each contractor's payments for the Form 1099 work.
Review the reports.
Compare the year with last year and explain the big changes.
Lock the year.
Close the books in your software so the year can't change by accident.
Hand over a clean year
Send one year-end package.
The year-end reports, the reconciliations and a short list of open questions.
Note what the tax preparer needs to know.
Unusual items, assumptions and anything you weren't sure how to treat.
Keep the questions in one place.
Answer the tax preparer's questions in one list rather than in scattered emails.
Common mistakes
Starting in January.
The questionnaire and the W-9 check belong in the fall.
Reconciling to the wrong date.
Use the statements that cover the last day of the year.
Leaving the year open.
A late change to a filed year causes problems for everyone.
Sending numbers without notes.
The tax preparer then asks questions you could have answered once.
Questions
When should year-end work start?
In the fall, with the questionnaire and the contractor check. The bookkeeping itself starts once the final month's statements arrive.
Who decides on write-offs and depreciation?
The client, with their tax preparer. Your job is to show the open items clearly and record what they decide.
Should I charge extra for year-end work?
That depends on your scope. If year-end work isn't in your monthly fee, quote it separately and say so in your engagement letter.
See where your firm's hours go at year end.
The free Snapshot takes about 3 minutes and works from your own answers.