Cleanup bookkeeping before filing taxes

Why clean-up matters: accurate tax reporting, maximize deductions, reduce audit risk, prepare reliable P&L and balance sheet for lenders/investors. (Sources compiled: accounting firms & SBA). Core bookkeeping clean-up checklist (actionable steps you can use as blog headings and checklist bullets): Reconcile every bank account, credit card, loan and petty cash.

Correct categorization of expenses; separate personal vs business. Review A/R (aging) and aggressively collect or write off bad debts (document write-offs).

Review A/P for expenses incurred in the tax year but paid after year-end (accrual adjustments). Perform physical inventory count and adjust COGS/inventory accounts.

Update fixed asset register and record depreciation, Section 179/bonus depreciation entries as applicable. Verify payroll records, year-to-date wages, and withholdings; prepare W-2s.

Collect W-9s and prepare/issue 1099-NEC/1099-MISC by Jan 31 (hard deadline). Record year-end payroll accruals and other accruals (PTO, bonuses).

Investigate and resolve outstanding reconciling items, uncleared checks, and intercompany transactions. Lock/close the period in accounting software and produce the accountant’s package (final P&L, balance sheet, general ledger, trial balance, copies of W-2/1099).

Practical execution tips: start months before filing deadlines, use automated tools to import/match receipts, consider outsourcing to a professional bookkeeper or fractional controller if backlog is large, and set a closing date in software.

State-specific compliance focus: every state has different requirements—check Secretary of State for annual/biennial report deadlines and fees, state Department of Revenue for sales/use tax registration and filing frequencies, and state tax/treasurer pages for unclaimed property rules.

Some states also impose entity-level franchise taxes (e.g., CA $800 minimum; Delaware and others have franchise fees). Use NASS as a hub to find each state’s SOS and DOR pages and use tax vendors (Avalara) for sales-tax-by-state specifics.

Why clean-up matters: accurate tax reporting, maximize deductions, reduce audit risk, prepare reliable P&L and balance sheet for lenders/investors. (Sources compiled: accounting firms & SBA). Core bookkeeping clean-up checklist (actionable steps you can use as blog headings and checklist bullets): Reconcile every bank account, credit card, loan and petty cash.

Correct categorization of expenses; separate personal vs business. Review A/R (aging) and aggressively collect or write off bad debts (document write-offs).

Review A/P for expenses incurred in the tax year but paid after year-end (accrual adjustments). Perform physical inventory count and adjust COGS/inventory accounts.

Update fixed asset register and record depreciation, Section 179/bonus depreciation entries as applicable. Verify payroll records, year-to-date wages, and withholdings; prepare W-2s.

Collect W-9s and prepare/issue 1099-NEC/1099-MISC by Jan 31 (hard deadline). Record year-end payroll accruals and other accruals (PTO, bonuses).

Investigate and resolve outstanding reconciling items, uncleared checks, and intercompany transactions. Lock/close the period in accounting software and produce the accountant’s package (final P&L, balance sheet, general ledger, trial balance, copies of W-2/1099).

Practical execution tips: start months before filing deadlines, use automated tools to import/match receipts, consider outsourcing to a professional bookkeeper or fractional controller if backlog is large, and set a closing date in software.

State-specific compliance focus: every state has different requirements—check Secretary of State for annual/biennial report deadlines and fees, state Department of Revenue for sales/use tax registration and filing frequencies, and state tax/treasurer pages for unclaimed property rules.

Some states also impose entity-level franchise taxes (e.g., CA $800 minimum; Delaware and others have franchise fees). Use NASS as a hub to find each state’s SOS and DOR pages and use tax vendors (Avalara) for sales-tax-by-state specifics.