# Year-End Bookkeeping Checklist: 10 Things to Clean Up Before December 31

- Link: https://hamtock.com/year-end-bookkeeping-checklist-small-business/
- Published: 2026-10-31T09:00:00-04:00
- Author: HAMTOCK Consulting

Every tax return is only as good as the books behind it. When your records are current
and reconciled on December 31, filing in the spring is mostly a matter of reporting
what is already there. When they are not, January and February turn into a scramble
of missing receipts, unexplained bank transactions and guesses.

The last two months of the year are the best time to fix that. Here are ten things
to clean up before the year closes.

## 1. Reconcile every bank and credit card account

Match each account in your books to the bank or card statement, month by month, 
through the latest statement you have. Reconciling is the single most important 
bookkeeping task, because it catches missing transactions, duplicates and errors
before they reach your tax return. If you are several months behind, start with 
the oldest unreconciled month and work forward.

## 2. Categorize uncategorized transactions

Most accounting software has a holding account for transactions it could not sort,
often labeled “uncategorized” or “ask my accountant.” Anything left there at year-
end is either a missed deduction or a possible problem. Go through it now, while
you still remember what each charge was for.

## 3. Separate personal and business spending

Personal expenses paid from a business account, or business expenses paid with a
personal card, are among the most common bookkeeping issues for small businesses.
Record them correctly as owner draws, owner contributions or reimbursements. Keeping
personal and business finances apart also helps protect the liability shield of 
an LLC or corporation.

## 4. Review accounts receivable

Look at every unpaid customer invoice. Follow up on what is collectible, and talk
with your advisor about invoices that are unlikely to ever be paid. If you use accrual
accounting, uncollectible accounts may be deductible as bad debts; if you use cash
accounting, unpaid invoices were never counted as income in the first place.

## 5. Review accounts payable and accrued expenses

Make sure every bill you owe is entered, and that nothing is recorded twice. For
cash-basis businesses, whether you pay a bill on December 30 or January 2 decides
which year the expense counts in. Make that timing a decision, not an accident.

## 6. Gather contractor information

For 2026 payments, most Forms 1099-NEC are only required for contractors you paid
$2,000 or more, up from $600 in prior years. Run a report of what you paid each 
contractor this year, separate out card and payment-app payments, and collect any
missing Forms W-9 now. We cover the details in our guide to the [new $2,000 1099 threshold](https://hamtock.com/1099-nec-2000-threshold-small-business/).

## 7. Check payroll records

If you have employees, confirm that payroll totals in your books match your payroll
reports and quarterly filings. Verify employee names, addresses and Social Security
numbers before W-2s are prepared, and check that any tips and overtime are tracked
correctly for the new W-2 reporting rules. Forms W-2 for 2026 are due February 1,
2027.

## 8. Update your fixed asset list

List equipment, vehicles, computers and furniture you bought this year, with the
purchase date, cost and the date each item was placed in service. Note anything 
you sold, traded in or threw away. Your tax preparer needs this information to calculate
depreciation, and missing assets often mean missed deductions.

## 9. Count inventory if you carry it

Businesses that sell products should take a physical count as close to December 
31 as possible and compare it with the books. Write off damaged or obsolete items
and investigate large differences. An accurate year-end count directly affects your
cost of goods sold and your taxable profit.

## 10. Organize your records

Save receipts, invoices, loan statements, lease agreements and mileage logs in one
place, organized by month or category. Digital copies are fine as long as they are
readable. A clear file saves hours at tax time and is your best defense if the IRS
or the Maryland Comptroller ever asks questions.

## Then run your year-end reports

Once the cleanup is done, run a profit and loss statement and a balance sheet for
the year to date. Compare them with last year. Large swings in revenue, expenses
or account balances are worth a second look before the books are closed. These reports
are also what you need for a [year-end tax planning](https://hamtock.com/year-end-tax-planning-maryland-small-business/)
meeting, where you can still make decisions that lower your 2026 tax.

## Behind on your books? We can help

If this list feels like more than you have time for, you are not alone. **HAMTOCK
Consulting** helps small businesses in Silver Spring and across Montgomery County
catch up on bookkeeping, reconcile accounts and close the year with clean, tax-ready
records. Learn more about our [accounting and bookkeeping](https://hamtock.com/what-we-do/accounting-bookkeeping/)
service and our [payroll](https://hamtock.com/what-we-do/payroll/) service.

Book a consultation today: call us at 240-432-2749 or email contact@hamtock.com.
We reply to consultation requests within one business day.

_This article is general information, not tax or accounting advice for your specific
situation. Talk with us before acting._