Every December, owners of million-dollar companies make the same discovery: the tax decisions that could have saved real money needed numbers from October, and those numbers weren’t ready. Equipment purchases, bonus accruals, retirement contributions and owner salary adjustments all depend on knowing where the year is heading. Guessing is expensive in both directions.
That’s why a year-end close works better as a four-month project than a two-week scramble. At GATP Solutions, the companies that come through tax season calmly are rarely the ones with the biggest finance teams. They’re the ones that started early and worked through the same list in the same order every year.
What follows is that list, arranged by month. It’s built for owner-operated businesses in the $1 million to $10 million range: companies with employees, a few bank and credit accounts, probably a loan or two, and a CPA who wants a finished file by February.
First, Check Whether January Through September Are Really Done
A year-end bookkeeping checklist assumes the first nine months are already closed. For a lot of growing companies, they aren’t. Accounts may be reconciled through June and then stop. Payroll may be recorded as one lump sum instead of wages, taxes and benefits. Credit card statements from spring may still be sitting in someone’s inbox.
If you’re more than two or three months behind, fix that before anything else, because every Q4 decision relies on year-to-date profit. You can do it internally if someone has the time, or bring in a team that handles catch-up bookkeeping to rebuild the missing months while your staff stays on current work. Either way, the goal is a reliable profit-and-loss statement through September by mid-October.
A quick test: pull your balance sheet as of September 30 and ask whether each line makes sense. Cash should match the bank. Loan balances should match the lender’s statement. If you can’t explain a line in under a minute, it needs work before you move on.
October: Build the Forecast That Drives Every Other Decision
With nine clean months in hand, project the full year. Take year-to-date revenue and expenses, add what you expect in the last quarter from signed contracts, seasonal patterns and known expenses, and land on an estimated annual profit.
This number matters because pass-through owners pay tax on it personally. If you run an S corporation, partnership or LLC, the business’s profit flows to your individual return whether you took the cash out or not. An October forecast shows whether the fourth-quarter estimated payment due January 15 needs to go up, and whether spending decisions in November and December are worth making.
Review Owner Compensation
S corporation owners who work in the business need to pay themselves a reasonable salary through payroll. October is the last comfortable point to correct a shortfall, since salary has to run through payroll before December 31 to count for the year. It’s also the time to confirm that health insurance premiums paid for shareholders who own more than 2% will be reported on their W-2s, which your payroll provider needs to know before the final run.
Check Retirement Plan Deadlines
If you’re thinking of adding a safe harbor 401(k) for next year, the required employee notice generally has to go out at least 30 days before the plan year starts, which means by December 1 for a calendar-year plan. SEP-IRA contributions, by contrast, can wait until the business’s filing deadline, so they’re a useful lever once the final profit number is known.
November: Make the Decisions That Change Your Tax Bill
November is decision month. The forecast is solid, there’s still time to act, and vendors can deliver before the year ends.
Equipment and Fixed Asset Purchases
If the business needs vehicles, machinery, computers or furniture in the next six months, buying and placing them in service before December 31 can pull the deduction into the current year. The 2025 tax law raised the Section 179 expensing limit to $2.5 million and restored 100% bonus depreciation for qualifying property, which gives most seven-figure companies plenty of room. Two conditions apply: the asset must actually be in use by year-end, and the purchase should make business sense without the tax benefit. Spending a dollar to save thirty cents is still spending a dollar.
Make sure every asset purchase is recorded as a fixed asset in the books with its date, cost and description. Your CPA will ask for exactly that list.
Bonuses and Accrued Expenses
Accrual-basis businesses can generally deduct employee bonuses in the current year if the obligation is fixed by December 31 and the bonus is paid within two and a half months after year-end. That usually means a board resolution or written bonus plan dated in December and payment by March 15. The rule doesn’t cover everyone, though. Bonuses to owners of more than 50% of a C corporation, and to S corporation shareholders, follow different timing rules, so confirm with your CPA before counting on the deduction.
The same thinking applies to other expenses. If you owe a contractor for December work, record the bill in December even if it’s paid in January.
Bad Debts and Customer Balances
Walk through the accounts receivable aging report customer by customer. Balances more than 120 days old deserve a hard look. If you’ve made collection efforts and the money isn’t coming, an accrual-basis business can write off the bad debt this year. Cash-basis businesses never recorded that income, so there’s nothing to write off.
December: Handle the Cutoff Work
December is about making sure transactions land in the right year.
Inventory Count
Companies that carry stock should schedule a physical count as close to December 31 as possible. The count sets ending inventory, which sets cost of goods sold, which sets gross profit. A count that’s 5% off on $800,000 of inventory moves profit by $40,000. Identify obsolete or damaged stock during the count and write it down rather than carrying it at full value.
Prepaid Expenses
Paying January rent or next year’s software subscriptions in December doesn’t automatically create a current-year deduction. Under the IRS’s 12-month rule, a prepaid cost is generally deductible now only if the benefit ends within 12 months of starting and before the end of the following tax year. An annual policy paid in December usually qualifies. A three-year prepayment doesn’t.
Payroll Final Run
Before the last payroll of the year, verify employee addresses and Social Security numbers, confirm fringe benefits such as company vehicles and shareholder health insurance are included in wages, and check that year-to-date totals in your payroll system match the wage expense in your books. Differences found now take minutes to fix. Differences found after W-2s are issued mean corrected forms.
January: File, Reconcile and Close the Year
The last month of the project is actually the first month of the new year.
Information Returns
Forms W-2 and 1099-NEC are both due to recipients and the IRS by January 31. Pull a vendor payment report, filter for contractors, and confirm you have a current W-9 for each. For payments made in 2026 onward, the 1099-NEC reporting threshold rises to $2,000 from the long-standing $600, which trims the list for many businesses but doesn’t remove the W-9 requirement.
Final Reconciliations and Lock
Reconcile December for every bank account, credit card, loan and merchant processor. Tie the fourth-quarter payroll tax return to the annual W-3 totals. Then close the year in your accounting software with a closing date and password so nothing gets changed after the CPA has the file.
What to Send Your CPA
A complete handoff usually includes a year-end balance sheet and profit-and-loss statement, the general ledger, bank and loan statements for December, the fixed asset additions list, inventory count results, payroll annual summaries, copies of 1099s filed, and a short note on anything unusual: a new loan, a large one-off sale, a vehicle purchase, a lawsuit settlement. The note saves your CPA hours of questions and saves you the billing that comes with them.
Common Places This Checklist Breaks Down
Three failures show up again and again. The first is starting in December, when the only decisions left are the expensive ones. The second is handing the list to a bookkeeper who has no authority to get answers from the owner, so items stall waiting for approvals. The third is closing the year on books that were never reconciled in the first place, which means the CPA builds the return on numbers nobody has checked.
Each has a simple fix: a calendar reminder for October 1, one person with the authority to chase answers, and a September balance sheet you actually trust.
Conclusion
A good year-end close is mostly a matter of timing. October gives you a forecast. November gives you room to make purchases, bonuses and write-offs count. December locks down inventory, prepaids and payroll, and January handles the filings and the final lock. Work through this year-end bookkeeping checklist in that order, starting from books that are current through September, and the tax return becomes a review of decisions you already made instead of a surprise you have to absorb.
