Year-end bookkeeping checklist for a small business, with a worked December close
Year-end bookkeeping is finished when every bank, card and loan account in your books matches a statement dated December 31, the loose ends are cleared, and your accountant has a trial balance they can file from. Most of the work happens in the first three weeks of January, once the December statements exist. Here is the checklist, then one made-up business worked through it.
The checklist
- Download the December statement for every account: checking, savings, each credit card, the merchant account and every loan.
- Reconcile each one so the December 31 balance in the books equals the printed balance.
- If a card statement closes before December 31, add the charges from the last days of the month so the year is complete.
- Clear anything sitting in uncategorized, suspense or "ask my accountant".
- Check each loan against the lender's statement and split the year's payments into principal and interest.
- List contractors paid during the year, with the amounts that count toward a Form 1099-NEC.
- List equipment bought during the year, with the date and cost.
- Ask your accountant whether they want accruals. Most cash-basis small businesses need none or very few.
- Run the profit and loss, balance sheet and trial balance for the year and send them with one page of open questions.
A worked December: Tidewater Mobile Detailing
Tidewater Mobile Detailing is fictional. It is a one-van car detailing business set up as a single-member LLC, keeping cash-basis books for the 2026 calendar year. It has one checking account, one business credit card and a van loan.
Checking: off by 65.00
The December bank statement closes at 14,797.30. The books say 14,862.30. The difference is 65.00, and two lines explain it:
- a 15.00 monthly service fee the bank took on December 31, never recorded
- a 50.00 refund sent to a customer by Zelle on December 22, also never recorded
Record both and the books land on 14,862.30 − 15.00 − 50.00 = 14,797.30, the printed closing balance. The refund reduces sales; it is not an expense.
The card: a statement that closes on December 27
The card's December statement closes on December 27 with a new balance of 2,316.85. Two more charges hit before the year ended: 184.20 of detailing supplies on December 28 and 62.40 of fuel on December 30. Both belong to 2026, so they go in the books now, from the January statement or the card's online activity.
The card balance at December 31 is 2,316.85 + 246.60 = 2,563.45. That is the number to check against, not the December statement alone.
The van loan: the line that moved the profit
Here is the one that mattered. The van loan started the year at 21,600.00 of principal. Tidewater paid 480.00 a month, twelve payments, 5,760.00 in all. Every payment had been categorized as vehicle expense.
The lender's December statement shows the principal at 17,200.00. So 21,600.00 − 17,200.00 = 4,400.00 of the payments reduced the loan, and only 5,760.00 − 4,400.00 = 1,360.00 was interest. The correcting entry, dated December 31:
| Account | Debit | Credit |
|---|---|---|
| Van loan | 4,400.00 | |
| Interest expense | 1,360.00 | |
| Vehicle expense | 5,760.00 | |
| Totals | 5,760.00 | 5,760.00 |
Before this entry the books showed 4,400.00 less profit than the business really made, and the balance sheet showed a loan 4,400.00 bigger than the lender says. Either one would have gone straight onto the tax return.
Contractors and equipment
Tidewater paid one outside detailer to cover a busy weekend in July: 2,350.00 by bank transfer. That is over the 2,000.00 threshold that applies to 1099-NEC for payments made from 2026, and the detailer is a sole proprietor, so a form is due. Ask for the W-9 now if you don't have it. The forms are due by January 31, which in 2027 falls on a Sunday, so the deadline moves to Monday, February 1.
The van was bought the year before, so the asset list for 2026 is one pressure washer at 1,890.00, bought in April. Your accountant decides how it is depreciated. The bookkeeping job is to make sure it is recorded as equipment with its date and cost, not buried in supplies.
What goes to the accountant
A trial balance at December 31, the year's profit and loss and balance sheet, the contractor list, the asset list, and the loan statement showing 17,200.00. Plus the open questions, which for Tidewater was one: was the 1,000.00 the owner moved in from personal savings in March a loan to the business or a contribution?
Why January and not December
You can't reconcile December until December's statements exist, and they usually arrive in the first week of January. Starting then leaves time before the March 15 and April 15 return dates without paying for an extension. Starting in March is how January's easy jobs turn into April's urgent ones.
The full timing table, a worked 1099 list and how accruals are handled are on our year-end bookkeeping page.
Disclosure: I'm Damin, and I run ZeraBooks. Our team does this close for small businesses on our own ledger, from the statements clients upload. Monthly clients get year-end as part of the monthly fee, which starts at $150 a month (USD); a year that was never kept is quoted on its own as catch-up. The details are on our bookkeeping services page.
The loan is the one to check first. It is the account most often wrong and the one nobody looks at until the lender's statement and the books disagree.
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