Business Bookkeeping Year End Checklist 2022

Balance Sheet Review

Use a comparative Balance sheet to view current year to prior year. Review any significant variances that might indicate bookkeeping errors.

Prior year Balance Sheet should match tax return

Confirm that your prior year balance sheet hasn’t changed since your tax return was prepared for last year.

Finish recording transactions

Make sure all transactions have been posted for the period.

Reconcile all bank, credit card, and loan accounts

Collect all year end statements. Be sure to resolve any uncleared/unreconciled transactions. Make sure your ledger balance at year end matches the final statement balance.

Review A/R Aging

Review a current accounts receivable aging report. Write off any uncollectible amounts.

Review A/P Aging

Review accounts payable aging report. Resolve any inaccuracies

Perform inventory counts and adjustments

Take a detailed count of all inventory inclusive of quantity and value on hand (value at cost). Write-off any unsellable/obsolete inventory. Update inventory management system to reflect the updated inventory records. Verify that the ending inventory balance reflects the actual cost value based on physical inventory count.

Reconcile payroll liabilities

Process year-end payroll including any bonuses. Review all deductions and benefits submissions. Verify the ending balance in all payroll liability accounts match actual payments made.

Reconcile excise tax liabilities

Process all final excise and business tax reports for the year. Verify the ending balance in all business tax liability accounts match reporting and all payments made.

Review all new asset transactions

Confirm that any significant purchases made in the current year are recorded in the correct asset category. Reclassify any purchases under $1000 to an expense. (This threshold might change for some businesses).

Record accruals

If reporting on an accrual basis, record any accruals for year end. Common accounts to consider are depreciation, amortization, payroll and benefit liabilities, business taxes, uncollectible/bad debt, services received but not yet billed, payments made on services not yet received, and deferred revenue.

Final Balance Sheet review

Look for any accounts with balances that either have significant changes from prior year, or no change at all. Investigate to see if anything is missing or inaccurate.

Profit & Loss Review (Income Statement)

In your accounting software, run a comparative Profit & Loss statement to compare year over year. Look specifically for any significant variances. When comparing the current year with prior year, you can look over each account for unusual amounts that might need to be audited, reviewed and adjusted. If needed, reclassify any transactions that have been posted to the wrong account.

Prior year P&L should match tax return

Confirm that your prior year Profit & Loss statement hasn’t changed since your tax return was prepared for last year.

Confirm revenue figures

Review sales figures and reconcile to your Point of Sale (POS) system, billing spreadsheets or any other revenue tracking methods. Ensure you have completed all invoicing for work performed. Review accounts receivable aging for uncollectible amounts.

Verify expenses

Make sure all bills have been entered and review accounts payable aging for any outstanding liabilities that need to be paid.

Review payroll expenses

Ensure payroll expense accounts match up with annual payroll reporting and payroll tax returns.

Review employee benefits paid

Make sure all employee benefits have been paid and posted to the correct accounts. Verify that the amounts are recorded to the appropriate pre-tax and post-tax accounts on employee payroll records.

Officer earnings

Verify that officer wages/earnings are reported in a separate expense account. Confirm amounts match payroll reporting figures.

Guaranteed payments (partnerships)

For partnerships, verify that compensation to partners for services is reported as guaranteed payments.

File W-2s 

Verify all information is current to your active staff with correct data: full legal name, address, SSN. Review exemptions and all benefits submissions.

File 1099s

You’ll need to have W-9s on file and report 1099-MISC or 1099-NEC for any vendors/contractors with total payments exceeding $600 throughout the year.

Review large purchases

Review any large expense transactions that might need to be reclassified. An example threshold might be any expense greater than $1000 should be recorded as a fixed asset.

Review charitable contributions

Donations that have a business purpose are tax deductible. Make sure they are categorized appropriately in a separate GL account.

Add Reimbursements 

Add any owner reimbursements for business expenses paid on behalf of the business from an owner’s personal accounts. (Mileage, cell phone, utilities, home office, supplies, etc.)

Final P&L review

Look for any accounts with balances that either have significant changes from prior year, or no change at all. Investigate to see if anything is missing or inaccurate.

Close Books

Lock the period and prevent accidental overwrites or changes to your accounting records.