Tax-Ready Books: The 15-Point Year-End Cleanup Checklist
Tax season doesn't have to be a nightmare.
But if you're a business owner doing over $300K in revenue, you should already know the drill:
Your tax preparer emails in March asking for documents. You scramble. You realize your books are a mess. Your CPA charges you extra for "cleanup work." And you vow that next year will be different.
Here's the truth: Tax-ready books aren't created in March. They're maintained all year—and ready to present soon after the calendar year wraps.
This 15-point checklist will help you get your 2025 books in order before tax season hits. Use it yourself, or hand it to your bookkeeper and say: "Make sure we've done all of these."
**Important Disclaimer:** I'm a CFO advisor and bookkeeper, not a certified tax professional. This checklist is designed to help you organize your books before meeting with your CPA or tax preparer. Always verify tax treatment, deductibility, and compliance requirements with your qualified tax professional before filing.
Why "Tax-Ready" Matters
When your books are clean and organized, three things happen:
Your CPA works faster (and charges you less)
You maximize deductions (clean records = confident claims)
You avoid extensions, penalties, and stress
When your books are a mess, you pay for it—literally. CPAs charge 20-50% more for "books and records cleanup" before they'll even start your return.
Let's make sure that doesn't happen.
THE 15-POINT YEAR-END CLEANUP CHECKLIST
SECTION 1: Account Reconciliations (The Foundation)
☐ 1. Reconcile ALL bank accounts through December 31st
Every checking and savings account should match your bank statements to the penny.
Why it matters: Unreconciled accounts hide errors, duplicate transactions, and missing expenses.
Red flag: If your "bank balance" in QuickBooks doesn't match your actual bank balance, something is wrong.
☐ 2. Reconcile ALL credit cards through December 31st
Every business credit card should be reconciled monthly—and definitely by year-end.
Why it matters: Credit card transactions are often where deductions hide (software, meals, travel).
Pro tip: If you've been putting this off all year, start with December and work backward. It's faster than you think.
☐ 3. Reconcile merchant accounts (Stripe, PayPal, Square, etc.)
If you accept payments online, these accounts need to reconcile too.
Why it matters: Merchant fees, chargebacks, and payouts don't always match your sales. Your tax preparer needs accurate revenue.
Common mistake: Recording gross sales instead of net deposits (after fees). Your CPA will catch this and require an adjustment.
SECTION 2: Transaction Categorization (Maximize Deductions)
☐ 4. Review and recategorize "Uncategorized Expenses"
If you have transactions sitting in "Uncategorized" or "Miscellaneous," fix them now.
Why it matters: Uncategorized expenses = missed deductions. Your CPA can't deduct what they can't identify.
☐ 5. Separate personal expenses from business expenses
If you've been using your business card for personal purchases (we've all done it), reclassify them as "Owner Draws" or "Personal Expense."
Why it matters: The IRS doesn't care that you "accidentally" bought groceries on the business card. Personal expenses aren't deductible.
How to fix it: Create a "Personal Expense" category or code them as Owner Draws.
☐ 6. Double-check large or unusual expenses
Any single transaction over $1,000 should be reviewed for proper categorization.
Why it matters: Large purchases (equipment, software, contractor payments) often need special tax treatment (depreciation, 1099 reporting, etc.).
Red flag: A $5,000 "Office Expense" might actually be a capital asset that needs to be depreciated.
SECTION 3: Income & Revenue (Get This Right)
☐ 7. Reconcile Accounts Receivable (A/R)
Your A/R report should only show actually unpaid invoices as of December 31st.
Why it matters: Your tax professional uses your A/R to determine taxable income based on your accounting method (cash basis vs. accrual). If your A/R is inaccurate, your tax return will be too.
How to fix it: Go through your A/R aging report. Mark anything paid as "paid" and write off anything uncollectible.
☐ 8. Record all income received in 2025
If you got paid in 2025 (even if you invoiced in 2024), it needs to be recorded as 2025 income.
Why it matters: The IRS taxes you based on when you received the money (cash basis) or when you earned it (accrual basis).
Common mistake: Forgetting to record end-of-year deposits that hit your account on December 30th or 31st.
☐ 9. Verify 1099 contractor payments (even if the deadline passed)
If you paid any contractor $600+ in 2025, you were required to issue them a 1099-NEC by January 31st. (The 1099-NEC reporting threshold is increasing from $600 to $2,000 starting in 2026)
Why it matters: The IRS cross-checks 1099s. If you paid someone and didn't issue a 1099, you can still be fined—even if you file late.
What to do now:
Run a report of all contractor payments for 2025
If you missed filing 1099s, file them ASAP (late is better than never)
Make sure you have W-9s on file for everyone
Talk to your CPA about any potential penalties and how to minimize them
Pro tip: The IRS is more lenient if you file late voluntarily than if they catch you during an audit. (The 1099-NEC reporting threshold is increasing from $600 to $2,000 starting in 2026)
SECTION 4: Balance Sheet Accuracy (Often Overlooked)
☐ 10. Review your Balance Sheet for inaccuracies.
Your Balance Sheet should make sense. If it doesn't, your books have errors.
Red flags to look for:
Negative cash balances (impossible unless you're overdrawn-means reconciliation errors)
Negative liability balances (this could means you've overcredited the account, possibly by recording a payment twice or miscategorizing a refund. Liabilities should always be positive)
Old, stale liabilities that should have been paid or written off
"Opening Balance Equity" with a balance (this means something was set up wrong)
Balance Sheet that doesn't balance (when Assets don't equal Liabilities + Equity) Your Balance Sheet should always balance by definition. If it doesn't, you have data corruption, deleted transactions, or serious errors that need immediate attention.
Why it matters: Your tax preparer uses your Balance Sheet to prepare your return. If it's wrong, your return will be wrong.
☐ 11. Clean up old Accounts Payable (A/P)
Your A/P report should only show bills you actually owe as of December 31st.
How to fix it: Review A/P aging. Mark anything paid as "paid" and write off anything you're not going to pay.
☐ 12. Reconcile loan balances
If you have business loans, the balance in your books should match your loan statements as of December 31st.
Why it matters: Loan principal payments aren't deductible (but interest is). Your CPA needs accurate loan balances to calculate interest expense correctly.
Pro tip: Make sure you're recording loan payments correctly—split between principal (not deductible) and interest (deductible).
SECTION 5: Tax Planning & Documentation (Don't Skip This)
☐ 13. Separate and document vehicle expenses
If you're deducting vehicle expenses, you need a mileage log or actual expense documentation.
Why it matters: The IRS loves to audit vehicle deductions. If you can't prove it, you lose the deduction.
Options:
Standard mileage rate (67¢/mile in 2025)
Actual expenses (gas, maintenance, depreciation)
Pro tip: If you didn't track mileage all year, estimate based on calendar entries and recurring client visits. It's better than nothing.
☐ 14. Document large deductions (meals, travel, home office)
If you're claiming meals, travel, or home office deductions, you need backup documentation.
What you need:
Meals: Receipts + business purpose + who attended
Travel: Receipts + business purpose + dates
Home office: Square footage calculation + proof of exclusive business use
Why it matters: These are audit triggers. The IRS will ask for proof.
☐ 15. Run a final Profit & Loss report and make sure it makes sense
Pull your 2025 P&L and ask yourself: "Does this look right?"
Red flags:
Revenue way higher or lower than expected
Expense categories that seem inflated or missing
Cost of Goods Sold (COGS) that doesn't align with revenue
Negative expense categories (means something was coded backwards)
Pro tip: Compare 2025 to 2024. Big swings (up or down) should be explainable.
What Happens After You Complete This Checklist?
Once you've worked through all 15 points, you should have:
✅ Clean, reconciled books
✅ Accurate income and expense records
✅ Maximized deductions
✅ Documentation to support your return
✅ A much happier (and cheaper) tax preparer
Should You Do This Yourself or Hire It Out?
Do it yourself if:
You're organized and detail-oriented
Your transaction volume is low (<200 transactions/month)
You have time and won't procrastinate
Hire it out if:
You're already behind
Your transaction volume is high (300+ transactions/month)
You'd rather spend 10 hours growing your business than reconciling credit cards
You want to make sure it's done RIGHT
Our Tax Time Special: 50% Off 2025 Cleanup
If your 2025 books need professional cleanup and you want ongoing support so this never happens again, we're offering:
🎯 50% OFF your 2025 catch-up or cleanup project
(When you sign up for ongoing monthly bookkeeping or advisory services)
What we do:
✅ Complete all 15 checklist items
✅ Reconcile every account through December 31st
✅ Produce accurate, tax-ready financial statements
✅ Answer your CPA's questions
✅ Keep your books clean every month going forward
Pro tip: If you are reading this in another year, ask us about the discount anyway!!
Tax season doesn't have to be chaos. You just need clean books and a plan.
Let's make sure you have both.
Tonya | Teal Business Solutions
Your Friendly CFO for Texas Service Businesses
