What should a small business's year-end bookkeeping close checklist include, and is there a template to run it?

What does the year end add to a month-end close?

If you close monthly, the final month's reconciliations are your last month-end close; if not, fold all twelve months into the reconciliation block. The year end adds once-a-year work: the inventory count and asset list, W-2 and 1099 checks, outside year-end documents, the preparer loop, the lock, and closing income and expense into equity. IRS Publication 583, describing double-entry books, says you close income and expense accounts at the end of each tax year and keep asset, liability and net worth accounts open. Intuit's help page "Lock your books in QuickBooks Online" says QuickBooks Online moves last year's net income to retained earnings when a new fiscal year starts, so there you confirm it at F4; in a manual ledger you post the closing entries, and in other software you check its year-end process.

None of it can wait: information returns have fixed federal dates, and any balance left open becomes next year's opening balance. Sending everything to the accountant unclosed only moves the year end's cost into next year.

Who closes the year, you or your accountant?

Agree the path with your accountant in writing before year end, because it decides your checklist and the package:

On every path the year's entries end up in your own books, or the new year opens from balances nobody closed. When you keep the books and an outside accountant prepares the return, lines H1 to H3 give the outbound package, the question loop and the inbound adjustments separate owners.

When must the close be finished?

Work back from the earliest federal date your close feeds, allowing the lead time your preparer asks for. The IRS dates depend on entity type and activity:

Publication 509 also says a due date on a Saturday, Sunday or legal holiday is generally met on the next day that is not one. State income, payroll and sales tax dates are separate; add each that applies.

If your year ends in another month, Publication 509 has you change some general calendar dates, which is why the return rows count from your year end, but says its employer's tax calendar applies to fiscal and calendar years alike, except for Form 5500-series plan returns. Form W-2 follows wages paid during the calendar year (W-2 instructions), Form 1099-NEC carries the calendar year (the Form 1099-NEC section of the 1099-MISC and 1099-NEC instructions) and Form 1099-K box 1a covers the calendar year (1099-K instructions). So a fiscal-year business runs T1 to T5 at each December 31 and asks lenders and processors for statements at its own year-end date.

Run the blocks in this order:

1. Before year end, agree the path and package date with your preparer, agree in writing who runs T1 and T2 and by which date, schedule any count, collect missing contractor names, addresses and taxpayer identification numbers, and set up your own EFTPS (Electronic Federal Tax Payment System) login if a payroll service deposits your taxes.
2. On the year-end date, count inventory.
3. In the first days after December 31, whatever your year end and ahead of every other block, reconcile December's bank, card and payroll accounts, run T1 and T2, and start T5: those forms carry the earliest dates.
4. As statements and forms arrive, finish the other reconciliations and tie-outs.
5. Post the adjustments.
6. Send the package by the agreed date and set the lock.
7. Answer questions, post the returned adjustments and confirm the books agree with the final figures.
8. Sign the year off, then run F4 at the first month-end close after that.

Which reconciliations must be finished, and against what evidence?

The example throughout is a calendar-year S corporation keeping accrual books in-house, with employees on a payroll service, contractors, stock for resale, a vehicle loan, card sales and sales tax in one state. A bookkeeper does the work, the owner reviews and an outside CPA prepares the return; in each Owner cell, the name before the slash does the line and the one after reviews it.

IRS Publication 583 states the test for the checking account: when your bank statement arrives, make sure the statement, your checkbook and your books agree. Lines R2 to R10 apply the same test to each balance's own outside record as this checklist's practice. For R7, the IRS page "Outsourcing payroll duties" says employers should make sure their payroll providers use EFTPS and should register for their own PIN to periodically verify payments. It also says EFTPS lets employers make and verify federal tax payments, so state payroll-tax deposits are a separate state check, like the state dates, and the payroll service's report alone does not verify them. Clear unexplained differences now, before any figure is reported.

Which year-end adjustments apply to your business?

Your accounting basis decides most of this block. IRS Publication 538 says that under the cash method you include income actually or constructively received during the tax year and generally deduct expenses in the year you pay them, while under an accrual method you generally report income in the year it is earned and deduct or capitalize expenses in the year incurred.

Making and reversing these accrual entries is its own procedure, part of adjusting journal entries. On the cash basis, skip A3 and A4 and accrue nothing by adjustment: invoices and bills your software already holds stay as entered, their open list goes to the preparer, and under the cash method each reaches income or expense when collected or paid. Merchandise is the exception: Publication 538 says that generally, if you produce, purchase or sell merchandise, you must keep an inventory and use an accrual method for sales and purchases of merchandise, subject to its exceptions, so ask your preparer before skipping A1, A3 or A4 for merchandise. Four lines rest on specific rules:

• Inventory. Publication 538 says you must value inventory at the beginning and end of each tax year, and that a book inventory must be checked by a physical inventory at reasonable intervals and adjusted to agree. Counting on the year-end date is this checklist's choice, not that rule.
• Assets. IRS Publication 946 says depreciation begins when you place property in service in your business or for the production of income, meaning it is ready and available for a specific use, and stops when you have fully recovered its cost or other basis or retire it from service, whichever happens first, so the list needs both dates.
• Prepaid expenses. Publication 538 says an expense paid in advance is deductible only in the year to which it applies, unless it qualifies for the 12-month rule.
• Bad debts. IRS Topic no. 453 says that generally, to deduct a bad debt, you must have previously included the amount in your income or loaned out your cash, and that you take the deduction only in the year the debt becomes worthless, which you show by taking reasonable steps to collect. It adds that cash-method taxpayers generally can't deduct unpaid fees and similar income, hence A6's trigger.

Which third-party documents must agree with the books?

Agreement has a specific meaning here:

• Payroll forms. The IRS's General Instructions for Forms W-2 and W-3 (2026) say to be sure the W-3 amounts are the totals of the Forms W-2, then reconcile Form W-3 with your four quarterly Forms 941 (or annual Forms 943, 944, CT-1 or Schedule H) by comparing box 2 withholding and the wages and tips in boxes 3, 5 and 7, counting only current-year adjustments on those returns (prior-year adjustments stay off this year's Forms W-2 and W-3); for social security and Medicare taxes (boxes 4 and 6), the returns' amounts, including current-year adjustments, should be approximately twice the W-3's. Where amounts differ, determine that the reasons are valid and keep the reconciliation for IRS or SSA inquiries.
• Ledger wages. On cash books, gross wages in the ledger equal the register's gross pay; on accrual books, add this year's year-end wage accrual (A4) and subtract last year's, since the register, like Form W-2, follows wages paid.
• Contractors. The IRS's Instructions for Forms 1099-MISC and 1099-NEC say payments made with a credit card or payment card and certain others, including third-party network transactions, are reported on Form 1099-K by the payment settlement entity, not on Form 1099-NEC, so split each contractor's total by payment method.
• Form 1099-K. The IRS's Instructions for Form 1099-K define the box 1a gross amount without regard to credits, cash equivalents, discounts, fees, refunds, shipping or other amounts, so compare it with recorded gross sales, not deposits, and list the differences.

T1 to T4 verify data; filing and furnishing sit outside this checklist, but a payroll service or preparer does not take the obligation over. The W-2 instructions say using a reporting agent or other third-party payroll service provider does not relieve an employer of the responsibility to ensure Forms W-2 are furnished to employees and Forms W-2 and W-3 are filed, correctly and on time, and that you may owe a penalty for each Form W-2 filed late; the 1099-MISC and 1099-NEC instructions put the January 31 requirement on you. So T5 is the owner's and runs against the due dates, not after the rest of the close: chase each confirmation before its due date and take any gap to your preparer the same day. A confirmation comes from whoever filed, so it is their record, not independent proof, and nothing in this checklist shows you the filing itself. As a backstop, the IRS page "Outsourcing payroll duties" says IRS correspondence goes to the employer's address of record and advises against changing that address to the payroll provider's: keep the address of record your own and open IRS and SSA mail yourself.

What does the accountant receive, and how do their adjustments come back?

The package goes out when the reconciliation, adjustment and tie-out blocks are done, or once the records are gathered if the accountant closes the year. It holds:

• The year-end trial balance, balance sheet, profit and loss, and general ledger detail
• Every reconciliation with its statement and every tie-out with its form
• The count sheets, the asset list, the prepaid, bad-debt and customer-deposit lists, and the dollar amounts of any foreign-currency balances
• On the cash basis, the list of invoices and bills open at year end
• The T5 confirmations, open questions and unusual transactions

Keep a dated copy of exactly what you sent. IRS Publication 583 says to keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code, which generally means until the period of limitations for the return they support runs out; if you have employees, to keep all employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later; to keep records relating to property, such as the asset list, invoices and bills of sale, until the period of limitations expires for the year you dispose of the property in a taxable disposition; and to keep copies of your filed tax returns.

Entering the returned entries is its own procedure. If your S corporation's return includes Schedule L, the IRS's Instructions for Form 1120-S (2025) say the balance sheets should agree with the corporation's books and records, so compare them line by line; for any other return, compare your books with the accountant's final trial balance. An entry left unposted leaves your books different from what was reported.

How do you finalize the year and sign it off?

Lock the year when the package goes out, so the figures the accountant works from cannot change unnoticed. Intuit's help page "Lock your books in QuickBooks Online" (updated 9/15/2026) says locking sets a lock date and tells you to reconcile your accounts up to it first; a change on or before that date brings a warning or a password prompt, depending on your settings, and with the warning option users can still make changes, while with the password option they must enter a password. Intuit's help page "Edit your closed books in QuickBooks" (updated 8/5/2026) says only admins can change the closing date and that an admin who forgot the password just enters a new one, so the lock does not stop an admin. Choose the password option, set a new password only the owner knows, and keep whoever enters transactions out of admin roles where you can. That page's Exceptions to Closing Date report shows changes made after you close your books; the owner runs it from their own login before sign-off and at each later month-end. The "Edit your closed books" page lists QuickBooks Online Advanced, Plus, Simple Start and Essentials, QuickBooks Ledger, Intuit Enterprise Suite and QuickBooks Solopreneur Plus; on another edition, confirm the report exists, and if it does not, rely on F4's comparison with the saved copy. In other software, check the vendor's documentation for its lock, who can change it and how changes show.

The bookkeeper performs the reconciliation, adjustment and tie-out blocks; the owner reviews each of those lines against its evidence, taking bank, card, lender and EFTPS records from the owner's own logins, never from copies the bookkeeper supplies; the accountant reviews the package; the owner signs the year complete. Because H3 posts behind the lock, the owner enters the password and checks the posted entries against the accountant's list. If one person does everything, there is no independent reviewer: review each line against its evidence on a later day, and ask the accountant to agree the bank and loan balances in the package to the statements you include.

F4 carries the year forward. On the accrual basis, the saved balance sheet is next year's opening position: receivables, payables and accruals already reached this year's income or expense, so once A3 and A4's accruals have reversed, collecting or paying them next year only clears the balance, while prepaid items and customer deposits reach expense or income next year as they are used or earned. On the cash basis, invoices and bills open at year end are not in this year's income or expense; they stay on the list, or in your software as entered, and reach income or expense when collected or paid, never through an entry to equity. A prior-year balance that differs from the saved copy means something changed behind the lock: find it before that close is signed off.

How do you turn this into a reusable template?

Copy the five block tables into a spreadsheet or task list, keep all six columns, and add the date done and the reviewer's initials. Tailor it each year in this order:

1. Delete every line whose trigger does not fire this year.
2. Add lines for anything new: the first year you hire, carry stock, borrow, collect sales tax or open a foreign-currency account is when its year-end line is easiest to miss.
3. Add your preparer's year-end request list, if they send one, as handoff lines, and check any year-end guide from your software's publisher against the F block.
4. Write in this year's dates from that year's Publication 509, General Instructions for Forms W-2 and W-3 and Instructions for Forms 1099-MISC and 1099-NEC, plus each state date that applies.

After sign-off, note which lines took longest and which adjustments the accountant made; turning those into monthly tasks shortens the next close.