The last weeks of December are the busiest of the year for a lot of businesses, and the books are usually the first thing to slip. But the work you do now decides how smooth January is, when W-2s, 1099s, payroll forms and sales tax returns all come due within a few weeks of each other.
Work through the list below, starting in November if you can.
1. Get the books up to date
- Record every sale, bill and expense through December 31
- Reconcile every bank account, credit card and loan through the December statement (here's how to do a bank reconciliation)
- Clear out uncategorized transactions and anything sitting "for review" in QuickBooks
- Separate any personal spending that went through the business accounts and record it as owner draws
If you're months behind, this step is a catch-up bookkeeping project, and it's worth starting now.
2. Review what customers owe you and what you owe
- Go through unpaid invoices and follow up on anything overdue
- Decide which old invoices you'll never collect. If you use the accrual method, writing off bad debts can reduce your taxable income (see cash vs accrual accounting)
- Check unpaid bills so nothing is recorded twice or missed
3. Count your inventory
If you hold stock, do a physical count as close to December 31 as you can, and compare it with the books. Write off damaged or obsolete items. Your ending inventory figure feeds directly into cost of goods sold, so an inaccurate count means an inaccurate profit.
4. Get ready for payroll forms
- Confirm every employee's name, address and Social Security number
- Reconcile the year's payroll totals against your payroll reports and quarterly filings
- Record any year-end bonuses in the right pay period
- Check that owner and officer pay is set up correctly
W-2s go to employees and the Social Security Administration by January 31. Form 941 for the fourth quarter and the annual Form 940 are due the same day. In 2027, January 31 falls on a Sunday, so the deadline moves to Monday, February 1.
5. Get ready for 1099s
- Collect a W-9 from every contractor you paid this year
- Total what you paid each contractor, leaving out card and PayPal payments
- Use the new $2,000 threshold for payments made in 2026
The full process is in how to file 1099s in QuickBooks. 1099-NEC forms are due on the same date as W-2s.
6. Review your tax position before December 31
Some decisions only help if you make them before the year ends. Talk to your tax preparer about:
- Whether to buy equipment you need before or after December 31
- Retirement plan contributions for yourself and employees
- Whether to pay certain bills or send certain invoices before or after year-end (this matters most on the cash method)
- Your fourth-quarter estimated tax payment, due January 15
7. Know your Texas deadlines
- Texas sales tax: quarterly filers report October through December by January 20, and annual filers report the whole year by the same date. See the Texas sales tax guide.
- Texas franchise tax: the annual report and Public Information Report are due May 15. Your year-end revenue figure decides whether you owe anything. See the Texas franchise tax guide.
8. Organize your records
- Save December statements for every account
- File receipts for larger purchases
- Keep the year's mileage log if you use a vehicle for business
- Back up your accounting file and store documents in one place your tax preparer can reach
9. Close the year in QuickBooks
Once the year is reconciled and reviewed, close the books by setting a closing date in QuickBooks, so nobody changes last year's numbers by accident. A small change to a closed year can throw off a tax return that's already been filed.
10. Plan next year
- Set a budget for the new year by month
- Review your prices, your biggest expenses and your cash reserves
- Decide whether to keep doing the books yourself or outsource your bookkeeping
Key dates for January 2027
| Date | What's due |
|---|---|
| January 15 | Fourth-quarter federal estimated tax payment |
| January 20 | Texas sales tax return for quarterly and annual filers |
| February 1 | W-2s, 1099-NECs, Form 941 (Q4) and Form 940 (January 31 falls on a Sunday) |
| May 15 | Texas franchise tax report and Public Information Report |
Want help closing the year?
Year-end is the busiest time to start, so the earlier the better. I help small businesses across Texas and the US close the year, get payroll and 1099 records ready, and hand clean books to their tax preparer, all online.
See my bookkeeping services or book a short intro call.
This article is general information, not tax advice for your specific situation. Deadlines move when they fall on a weekend or holiday.