Year-End Accounting Guide: What Every Business Should Tackle Before Closing the Books

Year-end can feel hectic. Payroll wraps up, receivables and payables pile in, and leadership wants a clear look at performance before planning for the year ahead. A focused approach helps keep the process on track and produces clean, reliable numbers going into tax season.

Start With the Essentials: Reconcile Every Core Account

Bank accounts, credit cards, loans, and merchant processors should all match the general ledger before anything else. As noted in the Financial Cents year-end checklist, businesses should “reconcile all bank accounts, credit cards, and loans” early in the close to avoid problems later. Taking this step first reduces the risk of lingering variances that slow down tax work or financial reporting.

Review Outstanding Invoices and Bills

Receivables that remain unpaid at year-end can distort revenue if they’re unlikely to be collected. Review what’s outstanding and decide whether an allowance or write-off is necessary. On the expense side, make sure all vendor bills and recurring charges are captured in the right period. As mentioned in the Financial Cents guide, companies should “review accounts payable and ensure all expenses are recorded” before closing the books.

If your business manages inventory, complete a physical count and remove any damaged or obsolete items. Many accounting resources point out that inventory adjustments are one of the most common issues affecting year-end accuracy.

Prepare Adjusting Entries and Confirm Cutoff

Once reconciliations and reviews are complete, it’s time to record standard adjusting entries. According to the Financial Cents checklist, organizations should “record adjusting entries” before finalizing financial statements. This includes depreciation, prepaid items, accruals and any corrections tied to timing.

After adjustments are posted, prepare your income statement, balance sheet and cash flow statement. A quick cutoff review helps confirm transactions are recorded in the appropriate year.

Address Payroll and Regulatory Requirements

Year-end payroll cleanup ensures wages, benefits, bonuses and retirement contributions are correct. This sets the stage for smooth W-2 and 1099 preparation.

As a reminder, there are additional W-2 reporting requirements for employers with qualified overtime and qualified tips.  Please review the IRS guidance to ensure you are in compliance with these additional reporting requirements.

Close the Books With Next Year in Mind

With year-end numbers finalized, use the results to support budgeting, forecasting and internal planning. Many year-end guides recommend documenting what worked well during the close and noting areas for improvement so next year’s process runs more smoothly.

Final Thoughts

A complete year-end close does more than tidy up the books. It supports better decisions, reduces compliance risk, and gives your organization a clearer starting point as you move into the new year. If you need support with year-end tasks, Brady Martz can assist with W-2 preparation, 1099 filings, and the broader year-end accounting process. To ensure we can accommodate your needs, please reach out no later than December 23, 2025. We’re here to help you finish the year with confidence and step into the next one fully prepared.

Sources:

Out of the Box Technology, Bookkeeping 101: How to Prepare for Year-End Accounting.
https://outoftheboxtechnology.com/blog/bookkeeping-101-prepare-year-end-accounting

Financial Cents, Year-End Accounting Checklist.
https://financial-cents.com/resources/articles/year-end-accounting-checklist/

Disclaimer:

This article is for general informational purposes only and is not legal or compliance advice. Situations can differ, and state requirements may evolve as Minnesota releases additional guidance. For support specific to your organization, please contact the qualified professionals at Brady Martz.

Elements of this article were generated with the assistance of AI-enabled drafting tools. The final version has been carefully reviewed by Brady Martz professionals to ensure it reflects our standards of quality and accuracy.