Start in October, not January
A year-end close done entirely in January is a reconstruction project. Done progressively from October, it is a review. The difference is whether you can still change the outcome.
Reconcile everything that can drift
- Bank and credit card accounts, every month of the year, not just December.
- Loan balances against lender statements, with the principal and interest split correct.
- Payroll liabilities against filed returns.
- Fixed assets against a depreciation schedule.
- Inventory against a physical count.
Clean up the accounts that collect mess
Every set of books has them: an ask-my-accountant account, an uncategorised expenses bucket, a suspense account. These should be empty at year end. Items sitting in them are usually transactions nobody understood at the time, and understanding them in January is harder than it was in June.
Review the balance sheet line by line
A profit and loss can look right while the balance sheet is wrong. Every balance should be explainable: this prepaid covers these months, this accrual relates to this invoice, this deposit is this customer. A balance nobody can explain is an error waiting to be found.
Decisions that must happen before 31 December
- Equipment purchases if you want the deduction this year.
- Retirement plan contributions and, for some plans, establishing the plan at all.
- Bonus declarations.
- Writing off genuinely uncollectible receivables.
- Reviewing owner compensation for reasonableness.
After 31 December these options close. This is the main reason year-end planning in November beats year-end filing in March.
TallyWise provides this as part of our bookkeeping services. Book a call to talk through your situation.
