Closing the Books on the Year: A December Checklist

A year-end close is not a bigger month-end close. A few things only happen once a year, and they are the ones that get missed.

Done in December, this is routine. Done in March, it delays the return that depends on it.

Reconcile every account, not just the main one

The operating account usually gets reconciled. Credit cards, savings, payment platforms and loan accounts often do not, and those are where duplicates and missing transactions hide.

Any account that touched the business during the year needs a reconciliation through 31 December, including ones you stopped using in March.

Chase the receivables you still intend to collect

Year end is the natural point to decide which outstanding invoices are genuinely collectable and which are not. Leaving uncollectable invoices on the books overstates both income and assets.

Writing them off is a decision with tax consequences, so make it deliberately rather than by leaving them to age quietly. A tighter receivables process through the year means fewer of these decisions in December.

Settle anything owed between you and the business

Owner draws, loans to or from the company, and expenses paid personally all need to be classified before the year closes. Left ambiguous, they tend to get posted somewhere convenient rather than somewhere correct.

If personal and business spending ran through one account at any point, separating them is the single most useful thing you can do before the books close.

Count what you hold and check what you own

Fixed assets should be verified as still existing and still in use. Equipment disposed of during the year needs removing rather than quietly depreciating forever.

Prepaid expenses and deferred revenue both need adjusting so income lands in the year it belongs to. These are the entries that most often get skipped entirely in a self-managed set of books.

How Exemplary Helps

Exemplary closes the year in December against a fixed checklist, so the figures handed to the tax preparer are final rather than provisional.

A return built on provisional books gets filed twice.