As the year winds down, business owners find themselves juggling holiday demands, final sales pushes, and—of course—year-end financial responsibilities. Strong year-end accounting isn’t just about filing taxes. It’s about setting your company up for a cleaner, more profitable start to the new year.

At Valvero Advisory, we help business owners build efficient, accurate, and scalable financial systems. Below are the essential year-end best practices every business should prioritize this December.

1. Clean Up Your Books Before January Comes Around

If your bookkeeping isn’t fully up to date, December is the time to close the gaps.

Key tasks:

• Reconcile all bank, credit card, and loan accounts
• Categorize uncoded transactions
• Record missing expenses (receipts, invoices, payroll entries)
• Ensure all revenue is properly recorded under ASC 606 principles
• Review for duplicate or incorrect entries

A clean set of books now prevents headaches—and IRS notices—later.

2. Review Accounts Receivable & Accounts Payable

Understanding who owes you money (and who you owe) is crucial for cash flow.

AR steps to take:

• Follow up on overdue invoices
• Write off uncollectible balances when necessary
• Consider offering year-end discounts for quick payment

AP steps to take:

• Verify vendor balances
• Capture all unpaid vendor bills
• Plan payments around cash flow and tax strategy

Healthy AR/AP management is one of the easiest ways to improve working capital.

3. Evaluate Payroll, Owner Compensation & S-Corp Requirements

If you operate an S-Corp or plan to elect one, year-end is an important checkpoint.

Make sure:

• Reasonable compensation has been paid to the owner
• All payroll taxes are filed and current
• Bonuses and final payroll runs are scheduled
• W-2 vs. 1099 classifications are reviewed

Proactive payroll planning helps avoid penalties and supports cleaner tax filings.

4. Conduct a Year-End Tax Strategy Review

This is where strong accounting turns into real tax savings.

Areas to review:

• Section 179 & bonus depreciation opportunities
• Timing of deductible expenses
• Retirement plan contributions (Solo 401(k), SEP-IRA, etc.)
• Estimated tax payments—especially if income increased
• R&D credit eligibility
• SALT planning if operating in multi-state jurisdictions

A 30-minute strategic review with an advisor can often save thousands.

5. Inventory Count & Cost of-Goods Update

For product-based businesses, a physical inventory count should be completed before year-end.

Confirm:

• Quantities on hand match the accounting system
• Obsolete or damaged inventory is written off
• COGS and gross margin reports reflect accurate inputs

Accurate inventory is essential for both taxes and margin analysis.

6. Review Your Financial Statements for Accuracy & Insights

December is the time to step back and analyze—not just record—your numbers.

Ask yourself:

• What were the strongest drivers of profit this year?
• Did expenses creep up more than expected?
• Is cash flow tight or improving?
• Should pricing be adjusted in 2026?
• Are there opportunities to streamline or outsource operations?

Your P&L, balance sheet, and cash flow statement tell the real story of business performance.

7. Prepare 1099s, W-9s, and Vendor Files Early

Avoid the annual January scramble.

Make sure you have:

• W-9s for all contractors paid $600+
• Clean vendor lists
• Accurate payment totals by contractor
• Proper classification for services vs. rent vs. legal payments

1099s must be filed by January 31, and penalties add up quickly.

8. Evaluate Your Accounting Tech Stack for 2026

A year-end review is a perfect time to upgrade systems.

Tools you may consider:

• Cloud accounting software (QuickBooks Online, Xero)
• Automated AP/AR platforms
• Expense management (Divvy, Ramp)
• Payroll platforms
• FP&A tools
• Integrated sales tax engines

Better systems reduce errors and save hours every month.

9. Build Your 2026 Budget & Forecast

Forecasting isn't just for large companies—every business should enter the new year with a financial plan.

A strong budget includes:

• Revenue targets
• Gross margin assumptions
• Hiring plans
• Operating expense targets
• Scenario planning (best, base, worst)
• Cash flow projections

At Valvero Advisory, we help businesses convert raw numbers into operational KPIs and execution plans.

10. Schedule Your Year-End Close & Kickoff Timeline

Finally, lock in your timeline.

A typical small-business close schedule includes:

• December cleanup (books, AR/AP, payroll)
• First week of January: final reconciliations
• Mid-January: 1099 preparation
• Late January: draft financial statements
• February–March: tax filing & year-end advisory

A documented schedule keeps everyone aligned—from owners to bookkeepers to tax advisors.