Year-end cleanup is most effective before records are sent to the tax professional. Clean books reduce follow-up questions and make tax planning more reliable.
Finish reconciliations
Reconcile every bank, credit-card, loan, payroll, sales-tax, and payment-processor account through December 31. Investigate old uncleared transactions and confirm beginning balances agree with prior-year adjustments.
Review the balance sheet
Look for negative asset balances, loan balances that disagree with statements, old receivables, old payables, duplicate accounts, undeposited funds, and unexplained owner transactions. Balance-sheet errors often survive because owners focus only on profit.
Review tax-sensitive activity
- Contractor payments and W-9 information.
- Equipment, vehicles, and other assets purchased or sold.
- Meals, travel, vehicle use, and home-office documentation.
- Owner payroll, draws, distributions, and reimbursements.
- Estimated-tax payments and sales-tax filings.
Document unusual events
Prepare a short written explanation of new loans, legal settlements, major refunds, forgiven debt, business acquisitions, new states served, or other events your tax professional should not have to discover by accident.