Essential Year-End Tasks for QuickBooks® Users in 2025

As we bid farewell to another year and set our sights on 2026, it's crucial for small businesses and accountants to wrap up 2025 with precision. Correctly closing the books sets a strong foundation for the year ahead. With 2025 bringing changes in tax regulations and new QuickBooks® Online (QBO) features, ensure these tasks are prioritized by December 31 to smoothly navigate the upcoming tax season.

1. Reconcile Financial Accounts

Leave no room for discrepancies. Navigate to Settings > Chart of Accounts > Reconcile to match each bank and credit card account with its statement. Confirm account balances, and rectify any transactions sitting in Undeposited Funds or Uncategorized categories. QBO now highlights unreconciled items to avert future issues.

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2. Audit Receivables and Payables

Generate aging reports: Accounts Receivable Aging and Accounts Payable Aging. Address outstanding invoices with statements to clients. Consider writing off overdue or uncollectible invoices, with careful accounting consideration. Similarly, review vendor accounts for any unchecked entries.

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3. Prepare Year-End Financial Reports

Thoroughly review your Profit & Loss, Balance Sheet, and Trial Balance across the full year to ensure accuracy. Identify anomalies such as negative balances or large entries and use class or location filters to reveal unusual variances.

4. Manage 1099 & Contractor Details

Ensure contractors are categorized appropriately for 1099-NEC or 1099-MISC. In QBO, navigate to Expenses → Vendors → Prepare 1099s and verify addresses, W-9s, and payments to prevent IRS complications in January.

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5. Execute Final Adjustments & Close the Fiscal Year

Process end-of-year adjustments including depreciation, amortization, bad debts, owner’s compensation, and transfers of retained earnings. Having the correct fiscal year settings under Settings→ Advanced in QBO is essential. Once adjustments are done, “close your books” to secure historical data.

6. Refresh Payroll & Employee Data

Prevent discrepancies in payroll records if using QuickBooks® Online Payroll. Essential pre-year-end tasks include:

  • Processing the final payroll, including bonuses and commissions.

  • Verifying accurate recording of all benefits, fringe payments, and retirement contributions.

  • Updating employee details like addresses and Social Security Numbers.

  • Previewing and correcting W-2 forms before submission.

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7. Utilize New QuickBooks® Features & Automations

The 2025 enhancements in QuickBooks® include upgraded automation, categorization, and interface. For firms using QuickBooks® Online Accountant to manage multiple clients, enrolling in these features now streamlines operations.

Bonus Insight:

Take advantage of QBO’s cash-flow projection or "budget vs. actual" reports to pinpoint potential financial gaps. Should 2025 uncover unforeseen expenses or decreased revenue, prepare reserves or adjust estimated tax obligations in advance.

Avoid a hectic year-end routine. By fine-tuning account reconciliations, substantiating balances, finalizing tax forms, refreshing payroll, and embracing QuickBooks® innovations, you can head into 2026 with confidence. A strategic end-of-year approach delivers long-term benefits.

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