# Year-end close checklist for accountants and bookkeepers

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By [Arthur Teboul](/authors/arthur-teboul), Founder, DokuTrak. Published 2026-10-27, updated 2026-10-27.

> **In brief:** A year end checklist for accounting walks a bookkeeper through closing a client’s fiscal year: the December document request, the final month’s reconciliations, year-end adjustments, the January payroll and contractor filings, and locking the prior year. Each step names who owns it and which client document it needs.

## The checklist: Year-end close checklist

Send the first group to the client in early December. Work the other groups in order, write the owner and the date beside each line, and tick it when the evidence is filed.

### December request to the client

- [ ] December statement for every bank and savings account: Including accounts opened or closed during the year; PDF from the bank.
- [ ] December statement for every business credit card: Employee cards included.
- [ ] Year-end loan and line of credit statements: Showing the ending principal and the interest paid for the year.
- [ ] Form 1098, or the lender’s year-end interest statement: Lenders issue Form 1098 only to individuals, including sole proprietors; corporations and partnerships get the interest statement.
- [ ] Mortgage statement for December: Principal, interest and escrow split for the last payment.
- [ ] Form W-9 for each vendor paid for services or rent: Only vendors with no signed W-9 on file.
- [ ] Invoices for assets bought during the year: Equipment, vehicles, computers, software: date and price.
- [ ] Payroll provider annual reports: Annual payroll register, last pay stubs, draft W-2s and Form 940.
- [ ] Signed inventory count at year end: Only if the client holds stock.
- [ ] Owner contributions and draws: Transfers in and out, personal cards used for the business.

### Final close of the year

- [ ] Complete the December month-end close: Every bank, card and loan account reconciled.
- [ ] Tie loan balances to the lender year-end statements
- [ ] Tie payroll liabilities to the fourth-quarter Form 941
- [ ] Review receivables with the client and record write-offs: Only balances the client agrees will not be collected.
- [ ] Clear stale payables and vendor credits
- [ ] Apply the capitalization policy to the year’s purchases: De minimis safe harbor items expensed if the client elects it; the rest capitalized.
- [ ] Post asset additions, disposals and depreciation: From the purchase invoices and the asset register.
- [ ] Post accruals, the prepaid true-up and the inventory adjustment: Accrual-basis clients only.

### January wage and contractor filings

- [ ] Confirm W-2s furnished and filed with Form W-3: Due February 1, 2027 for the 2026 year.
- [ ] Confirm the fourth-quarter Form 941 and Form 940 are filed: February 1, 2027, or February 10, 2027 if all deposits were on time.
- [ ] Confirm the state annual wage reconciliations are filed: State W-2 transmittals; dates vary by state.
- [ ] Run the vendor payments report for the calendar year: Payments by payee, to build the 1099 list.
- [ ] Drop corporations and card payments from the 1099 list: Keep attorneys and medical providers even if incorporated; card payments go on Form 1099-K.
- [ ] Check payee names and taxpayer IDs before filing: Against each Form W-9; IRS TIN Matching if the client is enrolled.
- [ ] Furnish and file Form 1099-NEC: Nonemployee pay of $2,000 or more: February 1, 2027 to recipients and the IRS.
- [ ] Furnish and file Form 1099-MISC: Recipient copy February 1, 2027; IRS March 1, 2027 on paper, March 31, 2027 electronically. E-file at 10 returns or more in total; Form 1096 with paper copies.

### Review, lock and archive

- [ ] Review the trial balance, profit and loss and balance sheet against the prior year
- [ ] Send the CPA the year-end package: Trial balance, reconciliations, asset register, loan schedules, payroll and 1099 filings.
- [ ] Post the CPA’s adjusting entries dated on the last day of the year
- [ ] Check opening retained earnings for the new year: Prior balance plus net income, less distributions.
- [ ] Set the closing date or lock date
- [ ] Preparer and reviewer sign-off with dates
- [ ] Archive the year’s statements, filings and workpapers: Employment tax records for at least 4 years.

Download: [PDF](https://dokutrak.com/downloads/pseo-v2/f5-checklists/year-end-close.pdf) · [Word](https://dokutrak.com/downloads/pseo-v2/f5-checklists/year-end-close.docx) · [Excel tracker](https://dokutrak.com/downloads/pseo-v2/f5-checklists/year-end-close.xlsx)

## The four phases of a year-end close

A year-end close is a month-end close with extra layers on top. The last month still needs every reconciliation, and then the year needs adjustments, filings and a hand-off to the tax preparer.

**The fiscal year** is the twelve-month period the books cover. The IRS calls a year that ends on December 31 a calendar year, and a year that ends on the last day of any other month a fiscal year ([IRS Publication 538, Accounting Periods and Methods](https://www.irs.gov/publications/p538)). The checklist below assumes a calendar year, so shift the months if your client closes in June or September.

Splitting the work by owner keeps it moving. The client gathers papers, the payroll provider files wage forms, the bookkeeper closes and adjusts, and a reviewer or CPA signs off.

| Phase | When | Owner | What comes out of it |
| --- | --- | --- | --- |
| Client request | Early December | Bookkeeper sends, client gathers | Statements, loan papers, Forms W-9, asset invoices, payroll reports |
| Final close | First half of January | Bookkeeper | December reconciled, aging reviewed, adjustments posted |
| Wage and contractor filings | January | Payroll provider and bookkeeper | Forms W-2, the fourth-quarter Form 941, Form 940, Forms 1099 |
| Review, lock, archive | After the CPA’s adjustments | Reviewer, then bookkeeper | Signed-off trial balance, locked year, filed records |

## What to ask the client for in December

Send one request early in December rather than a trickle of emails in January. Give the client a deadline in the second week of January, after the last statements of the year have been issued.

Ask for the December statement of every bank, savings and card account, including any account the client opened or closed during the year. A closed account still needs its final statement, or its balance cannot be proven.

Lenders send a year-end statement for each loan, so the interest split can match the lender’s figure. Form 1098 is narrower: a lender files it only for mortgage interest of $600 or more received from an individual, including a sole proprietor, and not for a corporation, partnership or trust ([IRS, Instructions for Form 1098](https://www.irs.gov/instructions/i1098)). For an incorporated client, the lender’s year-end interest statement is the proof.

Payroll and contractors need their own papers: the provider’s annual payroll register, the draft wage forms, and a Form W-9 for every vendor paid for services or rent who has none on file. The [W-9 guide](/documents/w-9) explains what a complete form looks like.

- Purchase invoices for equipment, vehicles and software bought during the year.
- Bills of sale or trade-in papers for any asset sold or scrapped.
- A signed inventory count on the last day of the year, if the client holds stock.
- Records of money the owner put in or took out, and personal cards used for business costs.

## January and February filings for the 2026 year

Wage and contractor forms fall due just as the close is running, so put them on the calendar before the year ends.

Forms W-2 for 2026 go to employees, and Copy A goes to the SSA with Form W-3, by February 1, 2027 ([IRS, General Instructions for Forms W-2 and W-3 (2026)](https://www.irs.gov/instructions/iw2w3)). The fourth-quarter Form 941 is due by the last day of the month after the quarter, and it may be filed by the 10th of the following month when every deposit was on time ([IRS, Instructions for Form 941](https://www.irs.gov/instructions/i941)). For 2026, January 31, 2027 is a Sunday, so that means February 1, 2027, or February 10, 2027 ([IRS Publication 15 (2026), Employer’s Tax Guide](https://www.irs.gov/publications/p15)). Form 940 follows the same pattern: February 1, 2027, or February 10, 2027 if all FUTA tax was deposited when due ([IRS Publication 15 (2026), Employer’s Tax Guide](https://www.irs.gov/publications/p15)).

For contractors, the floor for Form 1099-NEC rose to $2,000 for tax years beginning after 2025 ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)). Payments to a corporation are generally left out, with exceptions such as attorneys’ fees and medical payments, so check the entity type on each Form W-9 ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)). Form 1099-NEC is due January 31, and because January 31, 2027 is a Sunday, the next business day applies ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)). A payer required to file 10 or more information returns in the year, counting every form type, must e-file them ([IRS, General Instructions for Certain Information Returns](https://www.irs.gov/instructions/i1099gi)); paper filers send Form 1096 with the forms.

| Form | What it reports | Due for the 2026 year |
| --- | --- | --- |
| Form W-2 and Form W-3 | Wages and withholding per employee | February 1, 2027 ([IRS, General Instructions for Forms W-2 and W-3 (2026)](https://www.irs.gov/instructions/iw2w3)) |
| Form 941, fourth quarter | Withheld income tax, Social Security and Medicare | February 1, 2027, or February 10, 2027 if all deposits were on time ([IRS, Instructions for Form 941](https://www.irs.gov/instructions/i941)) |
| Form 940 | Federal unemployment (FUTA) tax | February 1, 2027, or February 10, 2027 if all FUTA tax was deposited when due ([IRS Publication 15 (2026), Employer’s Tax Guide](https://www.irs.gov/publications/p15)) |
| Form 1099-NEC | Nonemployee compensation of $2,000 or more ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)) | February 1, 2027, to the IRS and the recipient ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)) |
| Form 1099-MISC | Rents, prizes and other income | Recipient copy February 1, 2027; IRS copy March 1, 2027 on paper, March 31, 2027 electronically ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)) |

## Adjust, then close income into retained earnings

Finish the December close first, with every account reconciled to its statement. Year-end entries posted on top of an unreconciled month only move the errors into next year.

Then work the balance sheet one line at a time. Tie each loan to the lender’s year-end statement, and tie payroll liabilities to the fourth-quarter Form 941. Review old receivables with the client and write off what both of you agree will not be paid.

Depreciation comes from the fixed asset register. The IRS expects asset records to show when and how each asset was acquired and what it cost ([IRS Publication 583, Starting a Business and Keeping Records](https://www.irs.gov/publications/p583)), which is why the purchase invoices sit in the December request. If the client makes the yearly de minimis safe harbor election, items up to $2,500 per invoice or item, or $5,000 with an applicable financial statement, can be expensed instead ([IRS, Tangible Property Final Regulations](https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations)).

**Closing entries** are the entries that move a year’s income and expense balances into equity, so the new year starts at zero. Accounting software does this on its own when the new fiscal year opens. Your job is to confirm the result.

**Retained earnings** is the equity account that holds every past year’s profit, less what was paid out to owners. On the first day of the new year, it should equal last year’s balance plus net income, minus distributions.

## The package you hand the tax preparer

The CPA who files the return needs the books plus the evidence behind them. Send it as one package instead of answering questions one email at a time.

Include the final trial balance, the profit and loss, and the balance sheet. Add the reconciliations for the last month, the fixed asset register, the loan schedules, and copies of the payroll and 1099 filings.

For clients whose books are audited or reviewed, the same package becomes the list of items the auditor asks for. The [PBC list generator](/tools/pbc-list-generator) builds that list by area, such as cash, receivables and debt.

## Lock the year and archive what supports it

Wait for the preparer’s adjusting entries, post them dated on the last day of the year, and then lock the period. **A closing date** is the date before which the software refuses new or edited transactions, or asks for a password first.

Keep the year’s statements, reconciliations and invoices for the period of limitations, which is 3 years in most cases ([IRS Publication 583, Starting a Business and Keeping Records](https://www.irs.gov/publications/p583)). Employment tax records are kept for at least 4 years ([IRS Publication 15 (2026), Employer’s Tax Guide](https://www.irs.gov/publications/p15)).

Those files hold bank numbers and Social Security numbers, so store them the way IRS guidance for tax professionals describes. The [summary of IRS Publication 4557](/blog/irs-publication-4557) covers access control and secure storage for client data.

1. Post the preparer’s adjusting entries, dated on the last day of the year.
2. Run the final trial balance and compare it with the prior year.
3. Check opening retained earnings against last year plus net income.
4. Set the closing date or lock date on the last day of the closed year.
5. Archive statements, reconciliations, filings and the CPA package together.

## Questions people ask

### What is the difference between a month-end and a year-end close?

A month-end close reconciles accounts and reviews reports for one month. A year-end close does that for the last month, then adds depreciation, inventory and accrual true-ups, the January wage and contractor filings, the package for the tax preparer, and a lock on the whole year.

### When should I send the year-end document request to clients?

Send it in early December, with a deadline in the second week of January. That leaves time for December statements to arrive and for you to chase any missing Form W-9 before contractor forms are due.

### Do I need to post closing entries in accounting software?

Usually not. QuickBooks Online, Xero and most other packages roll the year’s net income into retained earnings when the new year opens. You check the opening balance instead of posting the entry yourself.

### What is the 1099-NEC threshold for 2026 payments?

For tax years beginning after 2025, Form 1099-NEC reports nonemployee compensation of $2,000 or more, up from $600 ([IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec)). Check the instructions each year, since the IRS may adjust the amount for inflation.

**Not advice.** This page is general information, not tax, legal or HR advice. Rules change: check the cited source and ask your own professional before you rely on it. Last reviewed October 25, 2026.

## Sources

- [IRS, General Instructions for Forms W-2 and W-3 (2026)](https://www.irs.gov/instructions/iw2w3): 2026 Forms W-2 and W-3 are due to the SSA by February 1, 2027, on paper or electronically, and employees must get their W-2 by the same date.
- [IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec): For tax years beginning after 2025 the reporting floor is $2,000; Form 1099-NEC is due January 31, Form 1099-MISC goes to recipients by January 31 and to the IRS by February 28 on paper or March 31 electronically, and a weekend date moves to the next business day. Payments to corporations are generally not reported, except attorneys’ fees and medical payments.
- [IRS, Instructions for Form 1098](https://www.irs.gov/instructions/i1098): A lender files Form 1098 for mortgage interest of $600 or more received from an individual, including a sole proprietor; no Form 1098 is filed for interest received from a corporation, partnership, trust or estate.
- [IRS, Instructions for Form 941](https://www.irs.gov/instructions/i941): Form 941 is due by the last day of the month after the quarter; if all deposits were made on time, it may be filed by the 10th day of the second month after the quarter.
- [IRS, General Instructions for Certain Information Returns](https://www.irs.gov/instructions/i1099gi): A filer required to file 10 or more information returns during the year must e-file, counting all form types together; paper Forms 1099 go to the IRS with Form 1096.
- [IRS, Tangible Property Final Regulations](https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations): Under the annual de minimis safe harbor election, a taxpayer may deduct tangible property up to $2,500 per invoice or item, or $5,000 with an applicable financial statement.
- [IRS Publication 15 (2026), Employer’s Tax Guide](https://www.irs.gov/publications/p15): Form 940 is due January 31, or February 10 if all FUTA tax was deposited when due (the 2025 return: February 2, 2026 or February 10, 2026); weekend dates move to the next business day; keep employment tax records for at least 4 years.
- [IRS Publication 583, Starting a Business and Keeping Records](https://www.irs.gov/publications/p583): Asset records must show when and how each asset was acquired and its price, and the period of limitations sets how long records are kept: 3 years in most cases, 6 years when income is underreported by more than 25%.
- [IRS Publication 538, Accounting Periods and Methods](https://www.irs.gov/publications/p538): A calendar year is 12 consecutive months ending December 31; a fiscal year is 12 consecutive months ending on the last day of any other month.

## More on this topic

- [Month-end close checklist](/checklists/month-end-close)
- [PBC list generator](/tools/pbc-list-generator)
- [What is a PBC list?](/blog/what-is-a-pbc-list)
- [Client documents for bookkeepers](/for/bookkeepers)

## About the author

Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. [Arthur Teboul](/authors/arthur-teboul).

How this page was made (methodology): it is built from the primary sources listed under Sources, and every rule and figure on it links to the source it comes from. Last updated October 25, 2026. Spotted an error or a rule that changed? [Contact us](/contact).

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