Managing Your Finances

U.S. Small Business Year-End Checklist

The end of the year can feel like a blur: Between online holiday shopping, family get-togethers, and running your business you may feel like you barely have time to keep up. Let alone attend to your small business year-end checklist.

But the end of the year and the beginning of the next is the most important time in your business. There are taxes to file, forms to send, and there’s planning to do. Use this checklist to close out this year well, and jump into the next one prepared and ready.

Small Business Year-End Checklist: To-Do Before December 31

This small business year-end checklist is broken down into 2 parts: To do before December 31 and to do after, so you can easily stay on top of what needs to happen, when.

Know Your Tax Forms and Due Dates

It’s time to grab your calendar and start marking down due dates. This includes due dates for U.S. tax returns. For example, 1040 personal income tax return (with Schedule C), partnership tax returns, corporation tax returns, as well as estimated tax due dates for the entire next year.

If that list feels overwhelming (yes, there are a lot of tax dates to know), we have a list that can help you get started filling out your own calendar.

For individuals and others filing as a disregarded entity (e.g., sole proprietorship):

• Personal Income Tax due date (including filing Schedule C): April 18
• Personal Income Tax due date (including filing Schedule C) with extension: October 16
• Quarterly estimated tax payment due dates for individuals: April 18, June 15, September 15, and January 15 (for income earned in the previous year).

For everyone:

• 1099-NEC and W-2 forms to be sent by: January 31
• 1099-NEC paper form to be sent by February 28 (you can file electronically by March 31)

For partnerships and multi-member limited liability companies (LLCs):

• Information return due date: March 15
• Extended tax return due date: September 15
• K-1s required to be filed by: March 15
• Quarterly estimated tax payment due dates for individuals receiving income from a partnership or LLC: April 18, June 15, September 15, and January 15 (for income earned in the previous year).

S corporations and C corporations:

(Note: That due dates listed below are based on a December 31 end-of-year.)

• S corp return due date: March 15
• C corp return due date: April 15
• S corp extended tax return due date: September 15
• C corp extended tax return due date: October 15
• Form 941 due dates: April 30, July 31, October 31, and January 31
• Form 940 due date: January 31

Remember, if any of these tax due dates fall on a weekend or holiday, the next business date is the due date. And these are just the federal due dates. Check with your state and local authority to determine what else you need to file, and by when.

Review Your Bookkeeping

Ideally, reviewing your books should happen monthly or quarterly. But before you get to the end of the year, take another look at how your year has gone so far. Answer questions like:

• Have you earned as much as you expected?
• Are your expenses what you expected?
• Is there anything you can do between now and the end of the year to help reach your goals?

Make Purchases

This is a good time of year to take a closer look at your annual income and expenses. If your revenue is greater than expected, congratulations! But you may also want to consider ways to increase your business expenses and deductions.

The end of the year is a great time to make any big purchases you’ve been thinking about, so you can write off the expense under this year’s taxes. For example, if you need a new computer, why wait until next year to purchase it? You can make the purchase before the end of the year and use it in order to take it as an expense, and lower your taxable income this year.

In the U.S., there are limits to the amount you can write off in this category (known as Section 179 expenses). And you must put the equipment into use for your business by the end of the year.

Collect W-9s

If you’ve worked with freelancers or independent contractors this year, you may need to fill out a 1099-NEC by the end of January. Remember that for anyone who you paid more than $600 to during the year, who isn’t an employee, you’ll need to issue a 1099-NEC.

Make that process easier by collecting a W-9 from them now. The W-9 includes their taxpayer information, which you’ll need to know in order to file your forms.

Review Your Business Structure

Sometimes keeping the same business structure isn’t the best option as your business grows. Many small businesses begin as a sole proprietorship (one owner) or general partnership (multiple owners), but then outgrow these basic business structures over time.

You may decide that it’s time to incorporate or form an LLC in order to protect your personal assets and enjoy added flexibility and potential savings on your taxes. Submitting your company formation paperwork before the end of the year or early January is the ideal time.

Review your options or work with an accountant to see if it would be beneficial to change to a different business structure.

Small Business Year-End Checklist: To-Do After December 31

Now that you’ve rung in the New Year, it’s time to close out last year and start this year strong.

Reconcile Your Accounts

Account for all of your transactions—bank, cash, and credit cards. Make sure that you have all of your month-end statements and documentation, and get your bank reconciliation statements. (It is good practice to prepare these monthly.) You will need to look for any discrepancies between your bank statements and the entries in your register.

You are looking for:

• Checks issued but not cashed
• Deposits that have not been credited
• Direct deposits and debits, and any other transactions that may have created a discrepancy

Add-in out of Pocket Expenses

As hard as you work to keep personal and business expenses separate, there are times when that doesn’t always happen. If there are any business expenses that you paid for out of your personal account, it’s time to add those to your expenses for the year. Make sure you keep the receipts for evidence that this was, in fact, a business expense.

You’ll also want to take this time to update your mileage logs if you drove for your business. Mileage can be included as a tax deduction, so don’t miss this step.

Review Your Financial Statements

Now that your books are complete, take some time to review how your business did during the year. Was revenue as expected? How about expenses? Did you have any cash flow issues during the year? If you had any big projects or initiatives this year, review them to see how those impacted your bottom line.

This is the time to stop and reflect so you can see what you want to change in this upcoming year.

Brush up on Your Deductions

Deductions help you reduce your taxable income, thereby reducing your taxes. Many of your deductions will be the expenses that you’ve included in your bookkeeping. But there may be other deductions that you’ll need to include.

It’s a good idea to review what you can and can’t take as a business deduction before you meet with your accountant. Do you have a home office that you can use as a deduction? Can you deduct your health insurance costs? Will you need to deduct the portion of your personal cell phone bill that relates to your business activities?

Gather and Send 1099 MISCs

Remember those W-9s you collected from freelancers and independent contractors last year? It’s time to get those out because the January 31 deadline to file any 1099-NECs is fast approaching.

You’ll also want to be on the lookout for any 1099-NECs that you might receive. When they come in, compare them to your records and make sure they have reported how much income you’ve earned correctly.

Schedule an Appointment with Your Tax Preparer

If you use a tax preparer to help you file your year-end taxes, it’s time to get on their schedule. Contact them now to set up an appointment to go through your tax information. Ask them if there’s anything specific that you should prepare so you go to the meeting ready.

Gather All Estimated Tax Payments

If you’re required to make estimated tax payments during the year, collect information on how much you paid during each of the quarterly payments. Your tax preparer will use this to report to the IRS how much you’ve already paid in taxes. Hopefully, your estimated tax payments were close to what you actually owe so you won’t have to pay anything additional during tax time.

Review Your Previous Budget and Create a New One

Now that you have everything organized and have looked over your financial statements, it’s time to reflect on your business budget. How closely did you follow your budget last year (if you made one)? Was there anything that threw it off that you want to address this year?

Use your previous budget, or your business performance from last year, and make a plan for the year ahead. Write out a detailed budget, thinking about what you’d like to accomplish in the next year. Don’t just write out numbers (e.g., “I want to increase sales by 20%”). Think about how you’ll get there.

If you want to increase sales, does that mean getting more new customers? If you’re going to get more customers, do you need to allocate more money to your marketing budget? Do you need to hire another employee?

Think through how you’ll accomplish each of your goals and how you can reflect this in your budget. Remember, your business budget isn’t there to restrict your spending, it’s to help you think of the best ways to use your money to propel your business forward.

Evaluate Your Retirement Contributions

When you’re self-employed, you are 100% responsible for your retirement savings. If you’re not contributing the maximum to your qualified or individual retirement plans, look at your budget to see if you can channel any extra money into your retirement account.

If you have been having trouble allocating anything for your retirement, you may want to consider setting up an automatic contribution for the next year to keep you disciplined and help grow your savings.

Request an Extension, If Needed

If you know you won’t be ready to file on time, request an extension. Filing for an automatic extension must be made by your business and personal tax return due date. Just remember that this is an extension for filing, not an extension to pay any taxes that you may owe. If you owe taxes, you’ll still need to pay them by the original due date to avoid paying any penalties.

Review Your Insurance Needs

Take this as an opportunity to do a little housekeeping and check in on your insurance policies. Are they all up-to-date? Do they still provide you with the coverage that you need? Are there any that you’d like to update?

The end of the year provides you a valuable opportunity to step back and look at how you’ve run your business, and how you want to run it in the future. While the end of the year can get overwhelming with forms to file and accounting to-dos, make sure to leave time to do the important planning tasks also outlined in this small business year-end checklist. They will help your business thrive in the long run.

This post was updated in December 2022.