Year-end close checklist

December work that the monthly close does not cover: inventory, contractors, assets, and the last estimated-tax date on the IRS calendar.

Important: Educational estimates only. Not tax, legal, or accounting advice. AI Accounting Desk is not a CPA firm and does not provide professional services. Verify figures with a licensed professional and official IRS sources (irs.gov) before making decisions.

General information, not tax or legal advice. The 1099-NEC threshold and the January 15 estimated-tax date below are IRS figures for the 2026 year. Filing a return is a separate deadline. Confirm both on IRS.gov. This checklist is not a return.

Finish the last month first

Run the month-end checklist for December before you start the items below. A year-end list on top of an unreconciled bank account just hides the error for twelve months.

Balances that only get a hard look once a year

Count inventory and price it at cost. Update account 1200. Cost of goods sold for the year should follow beginning inventory, purchases, and ending inventory, as on the COGS calculator.
List equipment bought and sold. New items belong on the asset account, not in supplies. Book straight-line depreciation if that is your book method. Tax depreciation is a separate computation; the MACRS lookup only applies published half-year rates to a basis you enter.
Review prepaids and accruals. Insurance paid for next year is an asset if you are on accrual. A December bill you owe and have not entered is a liability.
Match loan balances to lender statements, including owner loans. Interest is an expense. Principal is not.

People you paid

Reconcile wage expense and payroll liabilities to the annual payroll reports. W-2s come from those reports, not from a guess.
Total contract labor by payee. For payments made in 2026, the IRS information-return instructions set the 1099-NEC reporting threshold at $2,000 (the threshold for payments made before 2026 was $600). Collect name, address, and taxpayer identification number as you go. Filing is generally January 31; January 31, 2027 is a Sunday, so confirm the actual due date in the current instructions rather than assuming a shifted day.
Set aside anyone whose classification you are unsure about. The 1099 versus W-2 page points at the IRS categories. It does not decide a worker’s status.

The owner and the estimates

Tie draws or shareholder wages and distributions to the bank. Equity should explain the difference between profit and the cash the owner took.
Note the fourth 2026 estimated-tax installment. For calendar-year individuals, the IRS says income earned September 1 through December 31 is due January 15 of the next year. In 2027 that date is Friday, January 15. The calculator and the deadline page use that schedule. Weekend and holiday shifts, and disaster relief, can still move a date.
Export the profit and loss, balance sheet, general ledger, and the reconciliation reports. A preparer can work from a package. A password-protected book with no export is a delay.

What this page does not tell you to keep

How many years to retain records depends on the document and the IRS publication that covers it, including Publication 583. This checklist does not invent a retention period. Ask the preparer who signs the return which copies they want stored, and for how long.

Sources

IRS: Am I required to file a Form 1099 or other information return? — $2,000 threshold for 1099-NEC payments made in 2026; $600 for payments made before 2026.
IRS: Estimated tax due dates — September 1–December 31 income, due January 15 of the following year.