Year-End Tax Prep Checklist for Small Businesses

Why Year-End Tax Prep Starts Before December 31

The size of your tax bill — and how smoothly you file — is mostly decided by what you do before the year closes. Once January arrives, your options narrow to filing what already happened. A little year-end preparation turns tax season from a scramble into a formality. Here's the checklist.

This is a general checklist, not tax advice — rules and limits change yearly and depend on your situation, so confirm specifics with your accountant.

1. Close and Reconcile the Books

Everything downstream depends on accurate books. Before anything else:

Reconcile every account — bank, credit card, loan, MCA, and processor accounts — through year-end.
Categorize every transaction, and separate any personal spending that slipped in.
Tie out the balance sheet — loans, MCA balances, owner draws, and equity should all be correct, not just the P&L.

If you're behind, this is the step that makes or breaks your filing. Catch-up bookkeeping done now beats a rushed cleanup in April.

2. Pull Together Your Income Records

Total sales and revenue per your books.
1099-K forms from payment processors and marketplaces.
1099-NEC / MISC you received for services.
Interest, refunds, and any other income.

Reconcile these against your books so reported income matches — mismatches are a common audit flag.

3. Organize Expenses and Deductions

Receipts and records for the year, sorted by category.
A mileage log and vehicle expenses.
Home office square footage and related costs, if applicable.
Subscriptions, software, professional fees, and other recurring costs.
Business meals and travel, with the business purpose noted.

Clean categorization is where missed deductions get found — or lost.

4. Handle Payroll and Contractors

Confirm W-2s for employees are accurate (due to employees and the SSA by January 31).
Identify every contractor paid $600 or more and confirm you have a W-9 for each — chase missing ones now, not in January.
Prepare 1099-NEC forms (also due January 31).

5. Review the Big-Ticket Items

Fixed assets and depreciation — record any equipment or vehicles purchased; these affect depreciation and possible Section 179 or bonus depreciation.
Loans and MCA balances — confirm principal vs. interest is split correctly; financing costs are deductible, principal isn't.
Inventory — if you carry it, count it; year-end inventory directly affects cost of goods sold.
Bad debt — write off receivables you'll genuinely never collect.

6. Make Your Year-End Moves (Before Dec 31)

A few levers only work if you pull them before the year closes — ask your accountant which apply to you:

Timing income and expenses — deferring income or prepaying deductible expenses can shift the tax year (most useful on the cash method).
Retirement contributions — funding a SEP-IRA, Solo 401(k), or similar can cut taxable income.
Equipment purchases — buying and placing in service needed equipment before year-end may qualify for immediate expensing.
Estimated taxes — make sure your fourth-quarter payment is covered to avoid penalties.

7. Don't Forget Entity-Specific Items

S-corp owners — confirm you've taken reasonable W-2 compensation, not just distributions.
Partnerships and multi-member LLCs — line up the information each partner needs for their K-1.
Owner draws and distributions — make sure they're recorded correctly against equity.

8. Package It for Your Preparer

Hand your accountant a clean set: year-end financial statements (P&L and balance sheet), bank and loan year-end statements, payroll reports, 1099/W-2 details, fixed-asset additions, and last year's return. The more organized the handoff, the faster — and cheaper — the return.

The Bottom Line

Year-end tax prep isn't one big task; it's a short checklist done while there's still time to act. The single thing that makes all of it easy is books that are already clean and current — then year-end is a review, not a rebuild. If yours aren't there yet, now is the time to get caught up.