A Year-End Financial Statement Checklist

December 23, 2018 | Becky Betsill

Contributed By Becky Betsill

It is important to begin preparing your business records towards the end of the year to ensure a smooth tax filing process. This checklist will help you plan and eliminate last minute chaos.

Before starting, it’s important to keep a digital or paper copy (or both) of the following documents on hand. They’ll come in handy should there be any uncertainty as to when or why a transaction appeared on your financial statements.

• Bank Statements
• Credit Card Statements
• Interest Statements
• Payroll Reports
• Previous Year’s Tax Return

Income Statement To Do’s

The Income Statement (or Profit and Loss) is very important when filing taxes. It is an essential part of deciding the final number on which taxes are paid, what deductions are available, and how much, if anything, the business ends up owing in Federal taxes for 2018. It’s critical to make sure that all revenue and expenses are accounted for so that Net Income or Loss is completely accurate.

• Record all revenue (income).
• Record all expenses including any expenses you may have paid for on your personal credit cards or personal cash.
• Are all transactions properly categorized? Even though items in suspense might be cleared out, it’s a good idea to check over all accounts and make sure there aren’t any transactions categorized incorrectly. This will ensure an accurate picture for potential deductions and help to avoid any red flags.
• Make sure all payroll expense is accurate. Total wages paid must match the Form 941 quarterly payroll tax returns and W-2’s filed at year end. Be sure to record your employer payroll tax expense.
• Are there any items in Suspense/Ask My Accountant? These are unidentified transactions that need a home. Make sure they’re all cleared out and in their correct account. Getting them in the correct account can make a difference in the amount of tax you may have to pay.

Balance Sheet To Do’s

The Balance Sheet at of the end of the year shows a quick picture of the business. It highlights what is owned and what is owed. This information does get filed on the tax return for some entities, so it’s important to be accurate going into the new year. Many items on the balance sheet might need to be updated or adjusted manually.

• Reconcile your bank statements.
• Record any new asset purchases made in 2018 (cars, heavy equipment, real estate).
• Take inventory count (if applicable).
• If you have Accounts Receivable, review and make sure account balance is accurate and agrees to detail.

Liabilities and Equity
• Reconcile credit card statements.
• Look at your credit and loan balances and be sure that all loans are recorded and your statement balances match those on the balance sheet.
• Make sure any payroll tax that you currently owe is recorded and the account balance is correct.
• Make sure any sales and use tax you owe is recorded.
• If you have Accounts Payable, review and make sure balance is accurate and agrees to detail.
• Make sure any owner contributions or loans from owner are recorded.
• Make sure all owner distributions are recorded.
If on accrual basis:
• Payroll (and other) accruals: These are liabilities owed to employees or vendors for work done in 2018 but yet to be paid for by 2018. Adding these in keeps all 2018 expenses in 2018 where they belong, rather than in 2019 when they might be paid out.

Following this checklist will help you prepare for a smooth tax filing process. Download and print the checklist here.


This article is contributed by Freight Depot Accounting, “FDA.” FDA provides customized bookkeeping for startups and small businesses.