Year-end bookkeeping best practices: Jodi Arrant walks through what small business owners need to do before December 31 to close the year with clean books, fewer surprises at tax time, and perhaps even a smaller tax bill.
Show Notes Page: https://www.thehowofbusiness.com/627-year-end-bookkeeping-best-practices/
We're well into the fourth quarter, and it goes by fast. Too many small business owners wait until their CPA is desperately asking for more clarification sometime in March or April. By then, the chance to reduce your taxes may be gone. And clean books aren't just for taxes. The end goal is being able to use accurate financials to help you make business decisions.
Henry Lopez is joined by his bookkeeping partner Jodi Arrant to walk through a checklist of 11 year-end bookkeeping best practices: what to do now, what to provide your bookkeeper, and what to discuss with your CPA.
It starts with your CPA. If you only talk to your CPA when you hand over your box of receipts in January or February, you're putting yourself at a disadvantage. Q4 is the time to talk about equipment purchases, accelerating expenses you were going to make anyway, year-end bonuses, funding a 401(k), and catching up on estimated tax payments. As Jodi says, "You don't want to wait till December 31 and then find out you missed the chance."
Henry and Jodi also cover the new $2,000 threshold for 1099s, cleaning up transactions sitting in "Ask My Accountant" or miscellaneous, going digital with receipts, owner draws and the risks of commingling funds, capitalizing assets versus expensing them, cleaning up receivables, and giving your CPA access to QuickBooks Online.
Key Takeaways:
- Start now, not in January. Scrambling at the last minute is where you lose the accuracy in your books.
- Talk to your CPA before December 31. Many tax strategies only work before year-end.
- Collect W-9s early. The 1099 threshold is now $2,000 for 2026, and January 31 comes fast.
- Clean up uncategorized transactions monthly. If they aren't in the right buckets, you can't use your financials to make decisions.
- Keep business and personal funds separate. Commingling is an IRS issue and a liability exposure issue.
- Not every purchase is an expense. Ask your CPA for the threshold at which purchases become assets.
- Communicate proactively with your bookkeeper about new accounts, loans, purchases, and other changes.
The Year-End Bookkeeping Checklist:
1. Start year-end prep now
2. Meet with your CPA before December 31
3. Reconcile every account through 12/31
4. Prepare for 1099s
5. Resolve suspense accounts and uncategorized transactions
6. Get missing documentation to your bookkeeper
7. Review owner pay and payroll
8. Update loans, assets, and inventory
9. Clean up receivables and payables
10. Hold a year-end review and hand off to your CPA
11. Record your CPA's adjustments after the return is filed
The full checklist, with details for each item, is on the show notes page.
About Jodi Arrant: Jodi Arrant is the founder of J. Arrant Consulting, a bookkeeping and consulting firm in Eugene, Oregon, with over 17 years of experience in bookkeeping, payroll, and QuickBooks consulting. She is Henry's partner for The How of Business Bookkeeping Service.
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com
