Year-end Accounting Checklist: How to Close the Fiscal Year

It takes about 25 days for the average accounting team to conduct an annual close—which means now is the time to get started on your year-end accounting checklist. Not sure where to start? This year-end accounting checklist will get you started.

What is a Year-End Close?

At the end of the fiscal year, businesses typically carry out a financial accounting procedure known as a year-end close or “closing the books.” This process is essential to confirm that financial statements are in order and that your organization complies with accounting regulations. This process includes:

• Reconciling accounts
• Making adjustments for accruals and deferrals
• Calculating depreciation and amortization
• Valuing inventory
• Addressing income tax considerations
• Preparing final financial statements, including the income statement, balance sheet, and cash flow statement.

For many businesses, this process is finalized by closing journal entries to reset temporary accounts, ensuring a fresh start for the new fiscal year. It’s worth noting that proper documentation and, in some cases, external audits are vital to this process, making it a critical part of financial management and reporting.

Year-End Accounting Checklist

Here is a quick checklist to help you close the books and ensure a seamless start to the upcoming fiscal period:

Set Up a Closing Timeline: Begin by setting up a well-structured timeline that outlines the deadlines and tasks for closing your financial books. This step serves as a roadmap to ensure that the year-end process proceeds smoothly, keeping you organized and efficient so you don’t miss critical deadlines.

Collect Unsettled Bills and Receipts: Gather any outstanding invoices and receipts. You should expect delays, so plan accordingly.

To expedite the process, use automation software, allowing employees to quickly upload and digitize their expenses.

Double-Check Asset Records: Conduct a thorough review of your asset accounts—assets like equipment, property, or investments. Take the necessary time to verify the accuracy of recorded asset values, confirming that they reflect the current worth of your assets.

Reconcile Transactions: Now, it’s time to dive into your financial records and bank statements. Your goal? To match all income and expenses with the corresponding entries in your accounts.

Wrap Up Accounts Receivable and Payable: Close the chapters on accounts receivable (money owed to your organization) and accounts payable (money your organization owes to others). This step ensures that these accounts are up-to-date and accurately reflect the latest financial information.

Estimate Outstanding Receivables and Payables: Make sure to account for the money you expect to receive and bills you'll need to pay, even if the invoices haven't arrived yet. This helps provide a more accurate financial picture and prepares you for future transactions.

Adjust Grants and Entitlements: If your organization receives grants or entitlements (like government contributions or tax exemptions), review them to ensure they’ve been accurately recorded. Also, make sure any expenses related to them are accounted for.

Bookkeeping Done Right

When choosing a bookkeeping service, you must find experienced professionals who can offer every service you need. At STG Accounting, we offer all that and then some. We bring together the expertise of a large accounting firm with the personalized service you can only find at a smaller enterprise.

Want to learn how we can help your business? Contact us today.