At the end of the year, businesses must tie up loose ends and prepare for a fresh start. This is a period to reflect on achievements, address outstanding tasks, and set strategic goals for the coming year. One essential aspect of this process is creating a comprehensive end-of-year checklist. This checklist helps ensure financial accuracy and compliance, streamline operations, and boost team alignment.
In this article, we will guide you through the essential elements of year-end accounting, the importance of having an annual accounting checklist, and five critical tasks to include in your business end-of-year checklist. If you stay organized and proactive, you can confidently transition into the new year with clarity and purpose.
What is Year-End Accounting?
Your 2024 tax return will only account for your income and expenses from January 1, 2024, to December 31, 2024. As the year ends, taking advantage of your last opportunity to adjust your taxable income before filing is essential.
End-of-year accounting plays a critical role in preparing a company’s financial records for the fiscal year’s end. Whether you are a business owner or a tax professional, this period is key to ensuring that all financial aspects are accurately managed and ready for tax reporting, helping you make informed decisions for the upcoming year.
What Should Businesses Do to Create an Annual Accounting Checklist?
As the year winds down, now’s the perfect time to get ahead of your tax obligations. Taking proactive steps can reduce your tax burden and manage liabilities before 2024 closes. Create an accounting checklist to ensure you are set for success, both for this tax season and the year ahead.
Planning lets you stay in control, making it easier to manage the transitions that come with the end of the year. Rather than scrambling at the last minute, take a step back now to prepare, ensuring smoother financial management in the future. To learn more check out our Outsourced accounting services.
5 Things to Add to Your End-of-Year Business Checklist
To help you avoid the stress of last-minute preparations, here are five key items to include in your small business end-of-year checklist. By tackling these now, you will set yourself up for a smoother transition into the new year and avoid unnecessary complications in the future.
1) Annual Planning and Budgeting
As the year comes to a close, the annual budgeting and forecasting process should be a top priority for your business. Avoid delaying it until the new year—putting it off wastes valuable time and forces essential tasks to the back burner.
A well-structured plan is crucial for your business’s success in the year ahead. To help, we have created a comprehensive guide on annual planning and forecasting, complete with downloadable templates for headcount, budgeting, and more. Stay ahead by tackling these tasks now, ensuring you are prepared for a successful start to the new year.
2) Close Your Books
Closing your books at the end of each month is crucial for keeping your finances in order. For bookkeepers and tax preparers, the year-end can be hectic, and waiting until the last moment to finalize your year-end books can lead to complications, especially when tax season is around the corner.
Even if you are accustomed to closing at year’s end, stay on top of your books more regularly. Staying in touch with your tax preparer year-round can also make a significant difference, ensuring a smooth and stress-free tax season without costly mistakes.
3) Don’t Send W-2 and 1099 Forms Too Early
Timing is crucial when distributing W-2 forms to employees and filing 1099 forms for vendors. Aiming for January 20th to send these forms ensures smooth processing. Issuing them too early can lead to complications, especially if updates need to be made or reported to the IRS.
It is important to remember that employers aren’t required to send 1099 forms to international contractors who work exclusively outside the U.S. and are not U.S. taxpayers. Proper timing helps avoid unnecessary stress for you and your HR team, ensuring everything is filed accurately and on schedule.
4) Communicate New Workplace Policies
When considering changes to employee benefits or workplace policies, careful planning is key. Take time to research thoroughly, gather employee feedback, and develop a clear, well-structured plan.
Effective communication is crucial—ensure any updates are shared transparently, giving employees enough time to understand and adjust. Rushed decisions or unclear messaging can lead to confusion, mistrust, or even backlash. By approaching these changes thoughtfully and prioritizing open dialogue, you can maintain employee confidence and foster a positive workplace culture.
A collaborative and transparent process shows employees their concerns matter, building trust and support for any adjustments you make.
5) Ensure Payroll and Employee Tax Documents are Up-to-Date
Avoid unnecessary stress for you and your employees by ensuring your payroll systems are always up to date. For instance, if a remote employee moves from California to Colorado, failing to update their work location could lead to complications.
The payroll system might still classify them as a California employee, resulting in incorrect tax withholdings. This error could mean the employee faces double taxation—filing a non-resident return in California and a resident return in Colorado.
Staying proactive with system updates prevents such issues, saving time and avoiding financial headaches for everyone involved. Get connected with us to learn more about end of year tax strategies.
The Year-End Checklist: A Smooth Path to Next Year
Year-end tasks can feel overwhelming, but breaking them into manageable steps ensures nothing is overlooked. By focusing on planning, closing books, compliance, policy updates, and payroll accuracy, businesses can seamlessly transition into the new year.
A comprehensive checklist not only minimizes stress but also positions your business for success in the coming year. Start early, stay organized, and make the most of this critical period.
Fully Accountable provides accounting, CFO, and eCommerce CFO services which are designed to help businesses thrive. With expert support, we streamline your financial processes, ensuring accurate bookkeeping and insightful reporting. Let us handle the numbers so you can focus on what matters most—growing your business.
Frequently Asked Questions
Year-end accounting ensures accurate financial records, compliance with tax laws, and preparation for strategic planning. It provides clarity on a business’s financial health and supports informed decision-making for the future.
It’s ideal to start in late Q3 or early Q4. This gives you ample time to review financial records, make adjustments, and address compliance requirements.
Missing IRS deadlines for W-2 or 1099 forms can result in fines or penalties. Ensure forms are submitted by the required date, typically January 31.
Workplace policies should be reviewed annually or whenever significant changes occur in company operations or legal requirements.
Yes, using accounting software or payroll services can streamline tasks like reconciliation, payroll audits, and tax form preparation. Automation reduces errors and saves time.
