Year-End Bookkeeping Tips To Get You Ready For Tax Season

Whether you’ve been tracking things all year or you’re behind on your records, now is the time to get your books in order. Here are several clear, practical bookkeeping tips to help you close out the year properly and be ready to file your tax return in early 2026.

• Record owner contributions and draws in the proper account. Many small business owners commingle funds by putting personal money into the business or pulling money out without recording it properly. These transactions should be tracked under Owner’s Equity, not as income or expenses. Failing to do this can distort your profit and make tax time messy. Consider Use a dedicated equity account for each owner if there are partners involved. It’ll save you hours of confusion later.
• Break out large, one-off expenses. Not all expenses are created equal. Grouping a big one-time investment like rebranding or moving offices into the same category as monthly utilities makes your financial reports less useful. Break out these non-recurring costs to get a clearer view of your true operating expenses. This is especially helpful when analyzing profitability or preparing for a loan or investment pitch. Create a temporary catch-all review account.
• Create a temporary catch-all account. Instead of dumping transactions into Ask My Accountant or Miscellaneous, consider creating a temporary account called Year-End Review and move questionable transactions there. Then systematically go through each one. This keeps your main accounts clean while flagging everything that needs attention.
• Review loans and credit lines for misapplied payments. Loan payments often include principal and interest, but many times the full payment is simply recorded as an expense. This is incorrect, as the principal portion of your monthly payment reduces the loan balance, while only the interest is deductible on the income statement.
• Audit your recurring subscriptions. Many businesses slowly bleed money through unused software or services. Go through your monthly recurring charges and verify which expenses are still providing value. Cancel or downgrade the rest. Remember that bookkeeping isn’t just about recording, it’s also about keeping your business lean.
• Check for duplicate vendor entries. Sometimes a vendor gets entered twice with slightly different names (e.g., Google Inc. vs Google LLC), leading to fragmented records and duplicate payments. Run a vendor report and consolidate where needed. This is especially important if you pay vendors via bill pay or checks and rely on name-based lookups.
• Look for negative expense or income accounts. Negative amounts in expense accounts might mean you recorded a refund or return incorrectly, while negative income could signal a misclassified credit memo or discount. These aren’t just weird glitches…they can skew your profit and throw off your tax reporting. Conduct a search for negatives in your reports and double-check the original entries.

When your books are clean and up to date, you can file taxes faster, claim the deductions you deserve, and make smarter decisions for your business. Please call if you have questions about your business’s bookkeeping.