📘 Year-End Accounting Checklist for 2025: How Smart Businesses Close Strong
The fourth quarter always sneaks up faster than anyone expects. One day, you’re finalizing a summer campaign or approving a new hire, and the next — your accountant is asking for trial balances, your CPA is hinting about tax prep, and your investors want preliminary numbers.
For many business owners, year-end feels less like a finish line and more like a scramble. You’re juggling collections, vendor payments, payroll, and a hundred small details while trying to make sense of the numbers. It’s stressful — and if your accounting hasn’t been kept in shape throughout the year, it can feel overwhelming.
But here’s the truth: a strong year-end close is one of the most powerful strategic tools you have. It’s not just paperwork. It’s the moment your business tells its story — what worked, what didn’t, how healthy it really is, and where it’s headed next.
Let’s walk through the year-end process the way experienced CFOs and controllers do: with clarity, precision, and purpose. And yes — we’ll turn that stressful December rush into a chance to reset and start 2026 from a place of strength.
🧾 1. Start Where It All Begins: Your Bank and Credit Card Reconciliations
Imagine trying to plan a trip without knowing how much gas is in the tank. That’s what it’s like running a business with unreconciled accounts. If your books and bank balances don’t match, you’re building your financial strategy on sand.
Start your year-end close by reconciling every cash and credit account. This means matching every transaction in your general ledger with what cleared the bank. Pay special attention to accounts you might forget — merchant accounts like Stripe or PayPal, petty cash, or payroll clearing accounts.
✅ Action steps:
Match all transactions to bank and credit card statements.
Investigate and resolve any discrepancies before moving forward.
Reconcile merchant and petty cash accounts too.
📥 2. Turn Revenue Into Reality: Clean Up Accounts Receivable
If revenue is booked but cash hasn’t arrived, you don’t really have the money. Year-end is the time to separate what’s earned from what’s still owed.
Review every open invoice. Follow up with overdue customers — many businesses collect faster at year-end simply because they finally ask. Write off bad debts that realistically won’t be collected. Then reconcile your AR subledger with the general ledger to ensure accuracy.
✅ Action steps:
Review open invoices and chase overdue payments.
Write off uncollectible accounts where appropriate.
Reconcile AR details with your GL.
📤 3. Face Your Bills: Review Accounts Payable and Accruals
On the other side of revenue is reality: the money you owe. A clean close means your liabilities are fully captured.
Enter all vendor bills you’ve received — even if you haven’t paid them yet. Accrue expenses you know you’ve incurred but haven’t been invoiced for, like December utilities billed in January. Then, reconcile vendor statements to ensure your AP matches their records.
✅ Action steps:
Record all received bills, even unpaid ones.
Accrue expenses incurred but not yet invoiced.
Reconcile AP subledger with vendor statements.
🧑💼 4. Payroll: Your Largest Expense Deserves Attention
Payroll errors can snowball into compliance issues, unhappy employees, and tax trouble. Don’t leave this step for later.
Review all wages, bonuses, and benefits to ensure they’re recorded in the correct period. Verify payroll taxes withheld and remitted match your filings. And don’t overlook accrued PTO or bonuses that haven’t been paid yet — they belong in this year’s books if earned.
✅ Action steps:
Verify all payroll and benefits are in the correct period.
Confirm tax withholdings and filings align.
Accrue unpaid bonuses or PTO earned this year.
🏢 5. Capture What You Own: Fixed Assets and Depreciation
Throughout the year, your business likely purchased new equipment, replaced old assets, or retired outdated ones. Year-end is when you make sure the balance sheet reflects those changes accurately.
Record new asset purchases and retirements. Review depreciation schedules and ensure calculations are up to date. A physical asset inventory — even a simple one — helps verify what’s still in use.
✅ Action steps:
Record all new purchases and asset disposals.
Review and update depreciation schedules.
Conduct a physical asset inventory if possible.
🗓️ 6. Timing Is Everything: Prepaids and Deferred Items
One of the most common sources of misstatements is timing. Prepaid expenses (like insurance or software) should be amortized over their useful period. Deferred revenue should only be recognized when obligations are fulfilled.
Review all prepaids, deferrals, and unearned income to ensure they’re properly adjusted. It’s the difference between a balance sheet that’s merely close enough and one that’s audit-ready.
✅ Action steps:
Adjust prepaid expenses for the portion used.
Review deferred revenue under ASC 606.
Ensure unearned income is correctly classified.
📚 7. Inspect the Story: General Ledger Review
This is where a good controller earns their keep. A deep general ledger review is your chance to catch errors, misclassifications, or suspicious entries before they become bigger problems.
Look for unusual transactions, reclassify entries to the right accounts, and clear any suspense accounts. Compare this year’s results to prior periods to spot trends or anomalies that warrant a closer look.
✅ Action steps:
Review for misclassifications and unusual entries.
Reclassify accounts where necessary.
Clear suspense accounts and verify manual entries.
📊 8. The Finish Line: Prepare Financial Statements
Now it’s time to bring the story together. Your income statement, balance sheet, and cash flow statement are more than just compliance documents — they’re the clearest snapshot of your company’s financial health.
Draft them carefully, including all necessary GAAP disclosures. Review them internally before sharing with auditors, lenders, or investors. These statements will shape decisions in the coming year — make sure they’re telling the truth.
✅ Action steps:
Finalize all three core financial statements.
Review disclosures for GAAP compliance.
Circulate drafts internally before release.
🧾 9. Look Ahead: Tax Planning and Preparation
Tax season starts long before your CPA files anything. By tackling prep now, you reduce stress, avoid penalties, and often save money.
Confirm contractor classifications and W-9s, review fixed assets for depreciation deductions, and estimate your tax liability. A proactive conversation with your tax advisor in Q4 often pays for itself many times over.
✅ Action steps:
Verify contractor info and W-9s.
Review fixed assets for deductions.
Estimate taxes and plan for cash needs.
🚀 10. Set Your Compass for 2026
The best companies don’t treat year-end as an ending — they use it as a springboard. Once 2025 is closed, use the data to set budgets, define KPIs, and update forecasts. This is your moment to move from “what happened” to “what’s next.”
✅ Action steps:
Build your 2026 budget and forecast.
Define KPIs that align with growth goals.
Review cash flow and funding needs.
✨ Final Thoughts
Year-end isn’t just about closing the books — it’s about sharpening your visibility, tightening your controls, and strengthening the foundation for everything you’ll build next year.
And if this all feels overwhelming, it’s not a sign you’re failing — it’s a sign your business is growing. Many companies reach a point where a bookkeeper alone isn’t enough. That’s where a controller or finance partner steps in — to bring structure, clarity, and strategy to the close. 📩 Acrux Advisory helps businesses navigate year-end with confidence, from ASC 606 compliance to financial reporting and audit prep. If you’re ready to make 2026 your strongest year yet, let’s talk.
📌 Services & Disclaimer
Acrux Advisory is not a CPA firm and does not provide services requiring a public accountancy license. All services are focused on accounting operations, financial reporting, and controller-level support. We do not provide audit, attest, or tax services that require licensure. Availability may vary, and engagements are accepted based on current capacity.