The Ultimate Year-End Bookkeeping Checklist for Small Businesses
As the year comes to a close, small business owners have a unique opportunity to reflect on the past 12 months and prepare their finances for the year ahead. A clean and organized set of books not only sets the stage for smoother tax filing but also provides insights into your business’s performance and goals.
Here’s the ultimate year-end bookkeeping checklist to help you wrap up 2024 and start 2025 on the right foot.
1. Reconcile Your Accounts
Reconciliation is the process of matching your financial records to your bank and credit card statements to ensure they align.
Why It’s Important: This step catches any errors, duplicates, or missed transactions that could throw off your financial reports.
Action Step: Compare your statements to your bookkeeping records and investigate any discrepancies. If you use software like QuickBooks Online, the reconciliation tool can make this process much faster.
2. Review Outstanding Invoices
Check your accounts receivable for any unpaid invoices and follow up with clients who haven’t paid yet.
Why It’s Important: Collecting outstanding payments improves your year-end cash flow and ensures your books accurately reflect income earned in 2024.
Action Step: Send friendly reminders or follow-up emails to encourage prompt payment. Consider offering incentives for quick payments if needed.
3. Organize Receipts and Records
Ensure all receipts, invoices, and financial records are properly categorized and stored. Digital tools can simplify this process.
Why It’s Important: Organized records help you claim all eligible deductions and make tax filing less stressful.
Action Step: Scan and upload paper receipts to your bookkeeping software or use apps like Hubdoc or Expensify for streamlined record-keeping.
4. Categorize All Transactions
Go through your transactions for the year and ensure they’re categorized correctly in your Chart of Accounts.
Why It’s Important: Proper categorization ensures accurate financial reports and helps identify tax-deductible expenses.
Action Step: Review your Profit & Loss Statement to confirm expenses are in the right categories, such as office supplies, marketing, or travel.
5. Write Off Bad Debts
If you’ve been unable to collect payment from a customer despite repeated attempts, you may be able to write off the amount as bad debt.
Why It’s Important: Writing off bad debts reduces your taxable income, which can lower your tax bill.
Action Step: Work with your bookkeeper or accountant to determine if any outstanding debts qualify as uncollectible.
6. Conduct a Physical Inventory Count
If your business manages inventory, conduct a physical count to ensure your records match what’s on hand.
Why It’s Important: Adjusting your inventory levels prevents inaccuracies in your financial reports and identifies potential losses or obsolescence.
Action Step: Update your records to reflect accurate quantities and write off unsellable inventory.
7. Review and Generate Financial Reports
Run your Profit & Loss Statement, Balance Sheet, and Cash Flow Statement to review your business’s performance over the year.
Why It’s Important: These reports provide a clear picture of your revenue, expenses, assets, and liabilities, helping you identify areas for improvement in 2025.
Action Step: Analyze these reports for trends, such as seasonal revenue spikes or increasing expenses, to guide future decisions.
8. Prepare for Tax Season
Start gathering documents you’ll need for your 2024 tax return, such as W-2s, 1099s, and expense records.
Why It’s Important: Early preparation ensures a smoother tax season and reduces the risk of missing deadlines or deductions.
Action Step: Schedule a meeting with your accountant or bookkeeper to review your records and discuss strategies for minimizing your tax liability.
9. Set Up a Budget for 2025
Use insights from your 2024 financial reports to create a realistic budget for the coming year.
Why It’s Important: A solid budget helps you control expenses, plan for growth, and set measurable goals.
Action Step: Break your budget into monthly or quarterly targets to make tracking easier.
10. Close Out the Year
Once all adjustments are made, close out your books for 2024. This finalizes your financial records and creates a starting point for 2025.
Why It’s Important: Closing out the year ensures your reports are accurate and ready for tax filing.
Action Step: Work with your bookkeeper or use your accounting software to close the books and roll balances forward to the new year.
Set Yourself Up for Success in 2025
By completing this year-end bookkeeping checklist, you’ll enter 2025 with a clear understanding of your business’s financial position and a solid plan for growth. Staying organized now saves time, reduces stress, and positions your business for success in the year ahead.
Need Help?
At DPP Bookkeeping, LLC, we specialize in helping small businesses organize their books, prepare for tax season, and plan for the future. Contact us today or visit DPPBookkeeping.com to get started!