The weeks around December 31 decide how smooth tax season goes. Finish a few things before the year ends, a few more in January, and hand your CPA one clean package instead of a pile of questions.
Before December 31
These have to happen inside the year to count for it:
- Run any last payroll for yourself if you're an S corp, so your salary for the year lands where your CPA wants it. Here's how that number gets set.
- Submit your last expense report and get reimbursed for business costs you paid personally. This post covers how.
- Ask your CPA about retirement plan contributions and setup deadlines. Some fall before December 31.
- Ask your CPA how your health insurance gets reported, especially if you're an S corp owner.
- Count your meds and supplies on hand at the end of the day on December 31, if you keep inventory.
I wouldn't buy equipment in December only for the deduction. A purchase should make sense for the practice first. If you're already planning one, ask your CPA whether the timing matters.
In January
- Send your bookkeeper every December bank, card and loan statement.
- Collect a W-9 from anyone you paid as a contractor, and file 1099s by January 31. Here's who needs one.
- Make your January 15 estimated tax payment. This post explains the dates.
- Check that your payroll provider filed the year-end payroll forms and sent W-2s.
Close December like any other month, then a little more
The December close is the regular monthly close with a few extra checks. Every account gets reconciled to its December statement. Loan balances match the lender's year-end statement. Anything sitting in uncategorized gets cleared. Owner draws, contributions and distributions add up to what you think you took out and put in.
What to hand your CPA
- A full-year P&L and a December 31 Balance Sheet from reconciled books.
- Year-end statements for every loan.
- Payroll year-end reports and W-2s.
- A list of equipment bought during the year, with invoices.
- Copies of the 1099s you filed.
- Your estimated tax payment confirmations.
In a made-up example, an owner sends this package on February 10 with the books already closed. Her CPA files in March without a single follow-up question. The owner who sends twelve months of bank statements in April waits in line, and pays more for the cleanup.
What I'd do this week
- Ask your bookkeeper which months are reconciled so far this year.
- Email your CPA and ask what they want from you before December 31.
- Make a list of every contractor you paid this year, with totals.
Common questions
When should my books for the year be done?
I'd aim to have December closed by mid-February. That gives your CPA time to file without rushing or extending.
Should I prepay expenses in December to lower my taxes?
That's a question for your CPA. Prepaying only helps in certain cases, and it uses cash you might need in January.
What if some months this year were never reconciled?
Start now. Catching up in November and December costs far less than doing it in March while your CPA waits.
Want a clean year-end package for your CPA?
We reconcile every account each month, close December like any other month, and send your CPA the reports they need. If that's what you need, apply to work with us.