Year-end bookkeeping checklist for small businesses. 2026 edition.

This year-end bookkeeping checklist covers what a small business should finish before December 31 and in January: reconcile every account, confirm payroll and 1099 details, count inventory, update fixed assets and hand clean numbers to your tax preparer. Tick the items below as you go, or download the free PDF to print and share.

Before December 31

Most of year end happens in January, once the December statements arrive. A few jobs cannot wait that long, because they get harder or impossible once the year has turned:

• Invoices. Bill for everything you finished this year. Money you are owed is easier to collect, and easier to account for, while it is still this year’s.
• W-9s. Every contractor you paid needs one on file before you can prepare their 1099. A contractor who is still waiting for a payment answers much faster than one you paid in June.
• Payroll details. A wrong address or Social Security number becomes a corrected W-2 later. Check them now.
• Big decisions. Buying equipment, paying a bonus or prepaying an expense can change your tax for the year. That is your tax preparer’s call, so ask before December 31, not after.

Reconcile every bank, card and loan account

December is a normal month close with higher stakes: every balance on the year-end balance sheet goes into the tax return. Reconcile each bank, card, payout and loan account to its statement, and clear anything that is uncategorized or sitting in a suspense account. Our month end close checklist walks through the routine step by step.

Two things catch people out at year end. Credit card statements rarely end on December 31, so you need the next statement to see the last days of the year. And loan payments need splitting: the interest is an expense, the principal is not, and the balance in the books should match the lender’s year-end statement.

Payroll, W-2s and 1099s: confirm details now

For 2026 wages, W-2s go to employees and to the Social Security Administration by February 1, 2027, because January 31 falls on a Sunday. Before you send them, check that the year’s payroll in your books matches the payroll system’s annual totals, and that every quarterly filing and tax deposit was made.

For contractors, the 1099-NEC is now needed when you paid someone $2,000 or more in 2026 (it was $600 through 2025), and it is due to the contractor and the IRS by the same February 1, 2027 date. Payments made by card or through a payment app are usually reported by the payment company on a 1099-K instead. Our guide to the 1099 threshold for 2026 covers who gets one and the exceptions.

Inventory count and cost of goods

If you sell products and keep stock, the year-end count sets your cost of goods sold, and through it your profit. Count as close to December 31 as you can, value the count at what you paid, and adjust the books to match. The difference between the books and the shelf is shrinkage: damaged, expired or missing stock, written off in the year it happened.

Online sellers should count stock held in fulfillment warehouses too, using the platform’s inventory report for December 31.

Fixed assets and big purchases

List anything you bought this year that will last more than a year: equipment, vehicles, computers, furniture and software. For each one, keep the invoice and note the date it went into use. Record anything you sold, traded in or threw away as well, so it comes off the books.

How each purchase is treated for tax is your tax preparer’s decision. One rule worth knowing: under the IRS de minimis safe harbor, a business without audited financial statements can elect to deduct items costing up to $2,500 per invoice or item instead of depreciating them. The election is made on the tax return, so keep the invoices either way.

Owner draws, distributions and personal expenses

Money you took out of the business is not an expense, and money you put in is not income. Both belong in owner’s equity. Go through the year for personal spending paid from the business account and move it out of expenses; record it as a draw, or repay it. If you lent the business money, or it lent you money, write down the balance at December 31.

How owners should be paid depends on how the business is taxed. If you run an LLC, our guide to bookkeeping for LLCs explains draws, guaranteed payments and S corp payroll.

What to send your tax preparer in January

Once the year is reconciled and reviewed, most tax preparers will ask for some or all of these:

• The full-year profit and loss and balance sheet
• December statements for every bank, card and loan
• Year-end payroll reports and copies of W-2s
• Copies of the 1099s you filed, and any 1099-K you received
• The inventory count, if you carry stock
• Invoices for assets bought or sold
• Year-end loan statements
• Estimated tax payments made for the year

Then lock the year in your software, a closing date in QuickBooks Online or a lock date in Xero, so nothing changes after the numbers have gone out. If you would rather the same team kept the books and prepared the return, see our tax preparation and filing.

Behind on the year? Start here

If the books stopped in the spring, the year cannot be closed until the missing months are done. Start with the bank and card statements, work forward month by month, and tell your tax preparer early if the timing will be tight. Our guide on what to do when you are behind on bookkeeping sets out the first steps.

Frequently asked questions

Want a second pair of eyes before you hand the year over? A free books review shows what is misclassified or unreconciled. Add us as your accountant, and within about 48 hours you get a written list, free and yours to keep. Nothing in your books changes.