7 Ways to Make Year-End Accounting Simple [And Smart Checklist]

Year-end accounting doesn’t have to be stressful. With a clear plan, you can wrap up your financials and head into the new year feeling organized and ready for growth. This guide will walk you through a smart, step-by-step approach to simplify year-end accounting and make sure your books are clean, accurate, and ready for 2025.

Here’s a checklist to start, followed by detailed steps to make the process smoother. It’s the one we use at One 8 Solutions.

Quick Year-End Accounting Checklist

1. Review and Reconcile Financial Statements
2. Analyze Budget vs. Actual Performance
3. Prepare for Tax Season
4. Conduct Inventory and Asset Review
5. Confirm Accurate Account Reconciliation
6. Review Accounts Receivable and Payable
7. Prepare a Strategic Financial Plan for 2025

1. Review and Reconcile Financial Statements

Check Balance Sheets, Income Statements, and Cash Flow

Begin with a thorough review of your core financial statements. This includes your balance sheet, income statement, and cash flow statement, all essential for understanding your business’s financial health. Go through each line item to confirm accuracy—errors or missing information in these statements can lead to issues come tax season.

Tips for Reviewing Financial Statements

• Balance Sheet: Confirm that assets, liabilities, and equity totals are accurate and aligned.
  • • Verify that the inventory total matches the amount listed on your Balance Sheet.
    • Check that all items in prepaid accounts are clearly identified
    • In QuickBooks, confirm that the Accounts Receivable and Accounts Payable aging reports match the Balance Sheet. Any discrepancies here indicate a major issue.
    • Maintain a spreadsheet of fixed asset purchases to support the fixed asset total on your Balance Sheet.

• Income Statement: Verify that all revenue and expenses are accounted for and look for any unusual fluctuations

• Cash Flow Statement: Double-check the sources of cash flow, making sure they reconcile with your other statements

Revisiting these documents allows you to spot discrepancies early and address them before finalizing year-end numbers.

2. Analyze Budget vs. Actual Performance

Identify Overages and Opportunities for Next Year

Evaluating your budget against actuals provides insight into how your spending matched up with initial projections. This comparison helps identify areas where you might have over or under-spent; it also uncovers opportunities to refine your budgeting for 2025.

Steps to Analyze Budget vs. Actual

1. Compare Expenses: Find major variances in expenses and identify their causes
2. Revenue Analysis: Look for any areas of growth or underperformance
3. Future Planning: Use this data to adjust 2025’s budget, planning for anticipated costs or reallocating resources where they’ll have the most impact

A detailed budget review gives you a chance to improve your forecasting and create a more precise plan for the new year.

3. Prepare for Tax Season

Implement Tax Strategies to Minimize Liabilities

A proactive approach to tax preparation helps you reduce liabilities and verifies that no deductions or credits are missed. This step is especially crucial for small businesses looking to optimize their tax situation without last-minute stress. Check out our blog from last year on other ways to prepare.

Key Tax Preparation Steps

• Review Deductions: Identify eligible deductions for expenses like office supplies, equipment, and travel
• Accelerate or Delay Income: Depending on your financial outlook, consider deferring income or accelerating expenses to optimize taxes
• Consult Your CPA: Work closely with a tax professional to maximize savings and confirm compliance with the latest regulations

By preparing early, you’ll have ample time to address any outstanding issues before tax filing deadlines.

4. Conduct Inventory and Asset Review

Update Depreciation and Write Off Obsolete Items

Accurate inventory and asset valuation are key to getting a complete picture of your business’s financial standing. Physical inventory counts and asset assessments guarantee your balance sheet accurately reflects current assets.

Steps for Inventory and Asset Review

1. Perform a Physical Inventory Count: Update quantities and values for all inventory items
2. Review Depreciation: Update depreciation for assets which may include machinery and equipment
3. Remove Obsolete Items: Write off outdated or unsellable inventory to minimize tax liability and clear storage

Inform your tax preparer of any disposed fixed assets, as there may be a gain or loss to report

Finishing this step keeps your books ready and in great shape for year-end close.

5. Keep Account Reconciliation Accurate

Reconcile Bank and Credit Accounts

Reconciling your bank, credit card, loans, lines of credit and other financial accounts is essential for catching inconsistencies and verifying that every transaction is accurately recorded.

How to Reconcile Accounts

• Compare Statements: Match your internal records with bank and credit card statements
• Investigate Discrepancies: Address any mismatches, such as uncleared transactions or errors
• Record Missing Items: Add any overlooked expenses or deposits to confirm your records are accurate.
• Older Items: Review your bank and credit card reconciliations for transactions that are over six months and address unresolved items.

This step helps maintain an accurate financial picture and sets you up for a smooth tax filing.

6. Review Accounts Receivable and Payable

Clear Up Outstanding Invoices and Payments

Outstanding invoices can complicate year-end accounting, so it’s important to review accounts receivable and accounts payable closely. Be sure that all receivables are collected, and payables are settled (or properly accounted for) to help create a clean financial close.

Tips for Managing Receivables and Payables

• Invoice Follow-Up: Send reminders for any unpaid invoices, especially those approaching year-end
• Pay Outstanding Bills: Clear up any payables that could impact your expense reports or financial statements especially if you use cash-basis reporting for taxes
• Create a Payment Plan: For larger outstanding debts, set up a payment schedule to avoid cash flow disruption in the new year

Handling these transactions improves cash flow and keeps your books in excellent condition for the year-end review.

7. Prepare a Strategic Financial Plan for 2025

Leverage Year-End Data for Future Growth

With your financials finalized, use your year-end data to create a strategic financial plan for 2025. This plan will be your blueprint and incorporate past insights to make data-informed decisions that support business growth.

Steps for Strategic Planning

1. Set Revenue and Expense Goals: Use this year’s data to set realistic goals
2. Forecast Cash Flow: Project your cash flow to allocate adequate resources for upcoming expenses
3. Plan Major Investments: If you’re looking to expand, prepare a financial plan that includes budgeting for significant investments

A strategic approach positions your business for success and helps you make informed financial decisions throughout the upcoming year.

What Does Year-End Look Like for Your Business?

Year-end accounting doesn’t have to be overwhelming —as long as you plan ahead. With a few simple steps, you can feel confident about wrapping up your 2024 books and ready to kick off 2025 strong. Start early, stay organized, and remember, if you need a little extra guidance, we’re here to help.

At One 8 Solutions, we’re proud to be celebrating our 23^rd year in business and have been voted Woodward’s Top 50 CAS Award for the second year in a row.

Looking for a stress-free year-end close? Let’s make it easy together. Schedule a complimentary Zoom consultation with us, and we’ll help simplify your year-end accounting so you can start 2025 on the right foot. It’s the right next step.