On January 1, your 2026 books are locked in. Your tax return gets built from whatever is in them.
That makes the next 10 weeks the most useful time of the year for your accounting. You can still see what you’ve earned, make decisions that lower your taxes, and fix mistakes while the details are fresh.
This year-end accounting checklist covers what San Diego small business owners should finish before December 31.
The short version:
- Reconcile every account through September
- Clear out uncategorized transactions
- Collect contractor W-9s now
- Check your profit before buying equipment or making other year-end moves
- Recalculate your January 15 estimated tax payments
- Gather mileage logs and receipts
- Run full-year reports and lock the year
Why year-end accounting can’t wait until January
Most tax-saving moves have to happen before December 31. In February, you can’t go back and buy equipment, pay a bonus, or set up a retirement plan for last year.
Those decisions all depend on one number: your profit so far this year. If your books are three months behind, you’re guessing.
Cleanup also gets harder the longer you wait. In October, you can probably remember what a $1,400 charge from August was for. By March, it takes an email search and a phone call.
1. Reconcile every business account
Make sure every business bank account, credit card, and loan matches its statement through at least September 30.
Reconciling catches problems that throw off your numbers:
- Transactions recorded twice, or not at all
- Personal charges on the business card
- Business charges on a personal card
- Old checks and deposits that never cleared
- Full loan payments recorded as an expense (only the interest is deductible)
Every report you run depends on this step. If the accounts don’t reconcile, the reports are wrong.
2. Clear out uncategorized transactions
Most accounting software has a holding account called “Uncategorized” or “Ask My Accountant.” By fall, it often holds thousands of dollars.
Each transaction in it is either a deduction you’re missing or income that isn’t recorded correctly. Go through the list and assign every item. If you can’t identify a charge, ask your bank or vendor now, while the records are easy to pull.
3. Collect W-9s from contractors now
If you paid independent contractors this year, you may need to send them a Form 1099-NEC.
What changed for 2026:
- New threshold: You only need a 1099-NEC for contractors you paid $2,000 or more, up from $600. The One Big Beautiful Bill Act made this change for payments made in 2026, as NATP explains here.
- Same deadline: 1099-NECs for 2026 are due February 1, 2027, to both the contractor and the IRS.
The usual holdup is a missing W-9. Contractors who answered quickly in June can take weeks to reply in January. Pull a list of everyone you paid this year and request any missing W-9s today.
4. Check your profit before making year-end tax moves
Once your books are current, you have a real profit number to plan with. That’s when these decisions make sense:
Equipment and vehicles. For 2026, federal rules allow 100% bonus depreciation, and Section 179 lets you deduct up to about $2.5 million in qualifying equipment. California doesn’t follow either rule. It allows no bonus depreciation and caps Section 179 at $25,000. A large purchase can lower your federal tax much more than your state tax, so look at both before you buy.
Retirement contributions. Some plans, such as a solo 401(k), must be set up by December 31 to count for 2026. Others can be opened later. Find out which applies to you before the year ends.
Timing income and expenses. Depending on your accounting method, you may be able to shift some income or expenses into a different year. That only helps if you know where you stand.
No single move is right for every business. Every one starts with accurate numbers. This is where tax strategy work pays off.
5. Recalculate your January estimated tax payments
California front-loads its estimated tax payments:
| Due date | Share of the year’s estimated tax |
|---|---|
| April 15 | 30% |
| June 15 | 40% |
| September 15 | 0% |
| January 15, 2027 | 30% |
The Franchise Tax Board lists the full schedule on its estimated tax payments page. Your federal fourth-quarter payment is also due January 15, 2027.
If your income rose or fell a lot this year, your earlier payments may be off. Current books show whether to pay more or less in January, which helps you avoid underpayment penalties.
6. Gather the records the IRS expects
Some deductions need more than a bank transaction to back them up:
- Mileage: The 2026 business rate is 72.5 cents per mile. You need a log with dates, destinations, and the business purpose of each trip.
- Meals: Keep the receipt and a note on who attended and why.
- Home office: Record the square footage and keep the bills that support the deduction.
- Equipment: Keep invoices for vehicles, computers, and other major purchases so they’re depreciated correctly.
The IRS expects records that support every income and expense item on your return. Pulling them together now is far easier than rebuilding them during tax season.
7. Run your year-end reports and lock the year
When cleanup is done, run three reports for the full year:
- Profit and loss statement
- Balance sheet
- Cash flow summary
Read through each one. If a number looks wrong, track it down now.
Then set a closing date in your accounting software. That keeps anyone from accidentally changing 2026 while working in 2027.
Year-end accounting checklist
- Reconcile every bank, credit card, and loan account through September.
- Clear out uncategorized transactions.
- Collect W-9s from contractors likely to pass $2,000.
- Review year-to-date profit before equipment, retirement, or timing decisions.
- Recalculate your January 15 estimated payments.
- Gather mileage logs, receipts, and asset invoices.
- Run full-year reports, review them, and lock the year.
Year-end accounting FAQs
When should I start year-end bookkeeping?
October or November. That leaves time to fix errors and act on tax-saving moves before December 31.
What happens if my books aren’t caught up by year end?
Your tax return is still due. You’ll do the cleanup under deadline pressure, it usually costs more, and you’ll have missed the chance to lower your 2026 taxes.
Do I need to send a 1099 to every contractor?
No. For 2026 payments, you generally only need a 1099-NEC for contractors you paid $2,000 or more. Payments by credit card or through apps like PayPal are reported by the payment company instead.
Does California follow federal bonus depreciation?
No. California doesn’t allow bonus depreciation and limits Section 179 to $25,000, so equipment purchases are treated differently on your state return.
Can I do my year-end accounting myself?
If you have one bank account, few transactions, and current books, yes. If you’re months behind, have employees, or pay contractors, it’s usually faster and more accurate to hand it off.
Get your year-end accounting done before January
Your Personal Back Office helps small businesses across San Diego County get their books ready for year-end. We work with you remotely to reconcile your accounts, clean up uncategorized transactions, and deliver reports you can actually read. That gives you real numbers to plan with. Nick also builds a tax strategy with you while there’s still time to act.
See our bookkeeping and accounting services, or book a free financial review. Call 858-293-1984, Monday to Friday, 9 am to 5 pm Pacific Time (California).
This article reflects federal and California rules as of October 2026. It is general information, not tax advice for your situation.