Year-end always feels like it sneaks up on you. It doesn't, of course. December 31 is the most predictable date in the small-business calendar. But most owners I talk to don't start closing their books until late January, by which point they've already missed two filings and forgotten which vendor gave them a W-9 in March. This is the checklist I wish someone had handed me in my first year running a business.
It's also the exact sequence the AI accountant follows when you click "year-end" in BooksGPT, which is not a coincidence. We built the software around the checklist, not the other way around. If you're not on BooksGPT, you can do every step by hand. It just takes longer.
Print this page. Cross things off as you go. The checklist below is interactive in your browser; we save your state in localStorage, so refresh-proof.
Before you start
You'll want three things in front of you:
- Your year-end bank statements (December 31), all accounts.
- Your last six W-9s on file (or the spreadsheet you swore you'd keep).
- Your CPA's email address. Yes, before you start, not after.
Total time, if your books are reasonably clean going in: about 4 hours, split across two evenings. If they're not clean, plan a Saturday.
Pull every year-end bank statement
Every account: checking, savings, credit cards, merchant accounts (Stripe, Square, PayPal). Save the PDFs to one folder. You'll reference them in step 2, then again at step 14.
Before Jan 15Reconcile every account to the ending balance
Your books's "Cash" balance on Dec 31 must equal the bank statement's ending balance on Dec 31. To the penny. If it doesn't, find the missing transaction now. Not in April when your CPA does.
Before Jan 20Match Stripe / Square / PayPal payouts to the gross
If you book the bank deposit ($983.45 net) but never book the gross ($1,000) and fees ($16.55) separately, your revenue is understated and your CC fees are zero. Common mistake. Fix it.
Before Jan 20Hunt down duplicate transactions
The classic: bank feed pulls a charge in, you also import a CSV that includes the same charge, you have a duplicate. Sort your ledger by amount and merchant; look for back-to-back exact matches.
Before Jan 25Re-categorize anything in "Uncategorized"
If you have a catch-all "Uncategorized" account, every transaction in it costs you tax money. Walk the list. Move each one to its real account. If you can't tell what it was, attach a receipt or call it owner draw and move on.
Before Jan 25Book your year-end accruals
December utility bill that arrived January 12? Book it on Dec 31 as an accrued expense. Same for payroll that crossed the year, December's last Stripe sweep that hit on Jan 2, and any vendor invoice you got in early Jan for December services.
Before Jan 28True up depreciation
If you bought equipment over $2,500 this year, your CPA will want to know whether to depreciate or expense it under Section 179. Make a list of every fixed asset purchase with date, vendor, amount, and what it is. Don't try to depreciate it yourself.
Before Feb 1Build your 1099-NEC list
Every US contractor you paid $600+ via check or ACH (not card. Card payments go on 1099-K from the processor). Filter your vendor list by total paid YTD >= $600 and entity type = individual / LLC.
Before Jan 25Chase missing W-9s, today
Any 1099 vendor without a W-9 on file gets an email today. The IRS doesn't care that you couldn't get hold of them. You're still required to send the 1099, with backup withholding if you don't have the W-9.
Before Jan 25File 1099-NECs by Jan 31
Both the IRS copy and the recipient copy are due by January 31. If you have 10 or more, e-file is mandatory. The penalty per late form is $60 if you file within 30 days; it grows from there.
By Jan 31Reconcile sales tax across every state
For each state where you have nexus, tie your collected sales tax to what you filed and remitted. Any delta gets a true-up entry on Dec 31. This is the single most common audit trigger; do it right.
Before Feb 5Generate and lock the trial balance
Once everything reconciles, run the trial balance and lock the period. No more journal entries with a December date. From here on, any correction goes in via a current-period entry with a memo pointing back.
Before Feb 10Export the handoff package
P&L (accrual and cash), balance sheet, trial balance, general ledger, fixed-asset schedule, AR aging, AP aging, and the 1099 summary. Six PDFs and one Excel. One folder.
Before Feb 15Send the folder to your CPA
One email. Subject line: "[Business name] · 2025 year-end package". One link to the folder. One sentence: "Anything weird, let me know." That's the entire handoff. You're done.
Before Feb 15The deadline you keep missing
Of all 14 steps, the one most owners miss is step 10. Filing the 1099-NEC by January 31. The penalty looks small ($60 per form), but if you have 12 contractors, that's $720 in fines for a deadline most people forget existed. The IRS does not send a reminder.
File your 1099s. Today, if you can. Form 1099-NEC on irs.gov. If you have under 10, you can paper-file. If you have 10+, you must e-file as of 2024.
What changes when an AI is doing the close
If you're a BooksGPT customer, steps 1 through 7 are already done. Steps 8 through 11 are auto-generated; you review and approve. You spend your time on steps 12 through 14. The actual handoff. Instead of reconstructing the year from memory.
Steps 11 (sales tax true-up) and 7 (depreciation) are the two where the AI flags but defers to you. Sales tax because every state's rules are different, depreciation because it's a tax-strategy call you should make with your CPA. Everything else is a single click.
If you want the printable PDF version of this checklist (with deadline-by-deadline tabs and a CPA-handoff cover letter you can copy), download it here. We update it every year for tax-law changes.
- Dana