Xero year-end checklist for US businesses
By Arthur Teboul, DokuTrak · Published
In brief
A Xero year end checklist covers what to verify before the old year is locked, such as bank reconciliations, aging and sales tax reports, and the accountant’s year-end journals. It ends with US payroll and 1099 forms filed and a lock date set by an administrator.
The checklist: Xero year-end checklist for US clients
Send the first group to the client in December. Tick the Xero tasks as you go, and set the lock date only after the accountant’s journals are posted.
- PDFPrint it or tick it off on screen.Free, no email
- WordEdit it and send it under your name.Free, with your email
- Excel trackerOne row per item, with a status column.Free, with your email
Client documents for the Xero close
- December bank statementsEvery bank account in Xero, including closed ones.
- December credit card statements
- Lender year-end statements, and Form 1098 if issuedPrincipal owed and interest paid. Form 1098 goes only to individual and sole-proprietor borrowers.
- Missing contractor W-9s
- Invoices for equipment and other assets bought
- Inventory count on the last day of the yearOnly for clients who hold stock.
Checks in Xero
- Reconcile every bank account to its December statementUse the Bank Reconciliation report.
- Void or follow up on old unpresented checks
- Run the receivable and payable aging summariesWrite off bad debts the client agrees to.
- Check the sales tax returns and run a Sales Tax Audit
- Run the Trial Balance and support every balance sheet line
- Post year-end manual journalsDepreciation, accruals, loans, tax liability, sales tax.
US year-end forms
- Tie payroll in Xero to the provider’s annual register and Forms 941
- Confirm W-2s and W-3 are filedDue February 1, 2027 for the 2026 year.
- Run payments by contact and file 1099-NEC$2,000 floor for 2026 payments; corporations generally exempt, except attorneys. Due February 1, 2027.
Lock the year
- Set the lock date in Financial settingsAn administrator does this.
- Choose all roles, or all roles except administrators
- Review drafts dated in the locked year
Xero has no formal year-end close
Xero’s own guide says you do not need a formal year-end close or a roll-up journal (Xero Central (US), Do a year end in Xero). Reports run in real time, and the income statement shows zero for the new year until transactions are entered in it (Xero Central (US), Do a year end in Xero).
So the work is checking, not closing. You prove each balance, post the adjustments, and then stop anyone from changing the old year.
Most help pages for this search are written for Australia or the UK, where payroll year-end means Single Touch Payroll or end-of-year employee certificates. For a US client, the year-end forms are the W-2, Form 941, Form 940 and the 1099 series instead.
Xero reports to check, and what each is compared with
Xero splits the year-end work into tasks a business owner can do and tasks for the accountant or bookkeeper (Xero Central (US), Do a year end in Xero). If your client keeps their own books, send them the first half of this list.
The Bank Reconciliation report is the Xero report that compares the statement balance in Xero with the balance on the bank’s own statement. Unpresented checks and payments show up there, so it is where old uncashed checks get caught.
| Xero report or task | Compared with | Usually done by |
|---|---|---|
| Bank Reconciliation report | December bank statement from the bank | Owner or bookkeeper |
| Accounts Receivable and Accounts Payable Aging Summary | Balance sheet receivable and payable accounts | Owner or bookkeeper |
| Sales tax return and Sales Tax Audit | State sales tax returns filed for the year | Owner or bookkeeper |
| Trial Balance report | Statements and schedules for every balance sheet line | Accountant |
| Year-end manual journals | Depreciation schedule, accrual list, loan statements | Accountant |
Year-end journals the accountant posts
Xero lists the entries an accountant usually adds at year end, such as accruals, depreciation, loans, tax liability and sales tax adjustments (Xero Central (US), Do a year end in Xero). They can be entered straight into the client’s file, with no re-keying (Xero Central (US), Do a year end in Xero).
A manual journal is an entry typed into Xero by hand, rather than created from a bank line, an invoice or a bill. Attach the support to each one: the depreciation schedule, the loan statement, the accrual workpaper.
Loans and assets are where client paper matters most. You need the lender’s year-end statement to split principal from interest, and the purchase invoice to add an asset at the right date and cost.
US payroll and 1099s for a Xero client
US payroll for a Xero client often runs through a connected provider. Tie wages and payroll taxes in Xero to the provider’s annual register and to the quarterly Forms 941.
The provider usually furnishes and files the Forms W-2, but the deadline is still yours to watch. Forms W-2 and W-3 for 2026 are due to the SSA by February 1, 2027 (IRS, General Instructions for Forms W-2 and W-3 (2026)).
For contractors, run payments by contact for the calendar year and mark who gets a form. For tax years beginning after 2025, nonemployee compensation is reported on Form 1099-NEC at $2,000 or more (IRS, Instructions for Forms 1099-MISC and 1099-NEC). That form is due January 31, moved to the next business day when it falls on a weekend (IRS, Instructions for Forms 1099-MISC and 1099-NEC).
Set the lock date at the end of the year
A lock date is the date on or before which Xero users cannot add or edit transactions (Xero Central (US), Set up or remove lock dates). Set it once the accountant’s journals are in.
Only a user with the administrator role can set or change lock dates (Xero Central (US), Set up or remove lock dates). You can lock for all user roles, or for all roles except administrators, which keeps a way in for late adjustments (Xero Central (US), Set up or remove lock dates).
A lock is not a freeze on everything. Users can still create draft invoices, bills and expense claims, submit them for approval, and save draft manual journals (Xero Central (US), Set up or remove lock dates). Check the drafts list in January for any dated in the closed year.
- In the Accounting menu, select Accounting settings, then Financial settings.
- Under Lock Dates, enter the last day of the closed year.
- Choose whether administrators stay able to edit, then click Save.
- Review draft bills, invoices and journals dated in the closed year.
Questions people ask
Do I need a closing journal in Xero at year end?
No. Xero says there is no need for a roll-up journal, because reports run in real time and the income statement starts at zero in the new year (Xero Central (US), Do a year end in Xero).
Who can set or remove a lock date in Xero?
Only users with the administrator role (Xero Central (US), Set up or remove lock dates). They can remove it for a while to allow a change, then set it again.
Can anyone still post to a locked year in Xero?
If you chose to lock all roles except administrators, an administrator can. Other users cannot add or edit transactions on or before the lock date, but can still save drafts, such as a draft bill or manual journal (Xero Central (US), Set up or remove lock dates).
How do US Xero users handle W-2s at year end?
Usually through the payroll provider connected to Xero, which furnishes and files them. Your part is to tie Xero’s wage and tax totals to the provider’s annual register before the deadline.
Sources
- Xero Central (US), Do a year end in Xero: No formal year-end close or roll-up journal is needed; the steps are reconciliations, the aging, sales tax and trial balance reports, year-end manual journals, and a lock date.
- Xero Central (US), Set up or remove lock dates: Only administrators set or change lock dates; locks apply to all roles or all except administrators; drafts can still be created before the lock date.
- IRS, Instructions for Forms 1099-MISC and 1099-NEC: 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, General Instructions for Forms W-2 and W-3 (2026): 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.
About the author
Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. Arthur Teboul.
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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.
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