10 Financial Tasks Every Business Should Complete Before Year-End

As the year draws to a close, businesses must turn their attention to crucial financial tasks that ensure a smooth transition into the new year. Just as much as it is at a personal level, the end-of-year period is a time for reflecting, planning, and preparing your business for the new year. From finalizing budgets to preparing for tax filings, these tasks are essential for maintaining financial health and compliance. Here are 10 key actions the finance department should prioritize before December 31:

1. Finalize the Annual Budget for the Upcoming Year

A well-prepared budget sets the tone for the coming year. By year-end, finance teams should collaborate with department heads to review projected revenues, expenses, and capital investments. Adjustments based on current-year performance and updated market conditions ensure the budget is realistic and aligned with strategic goals.

Tip: Use historical data, market trends, and input from leadership to build a flexible budget that accommodates unforeseen changes.

2. Reconcile All Accounts

Reconciling bank accounts, credit card statements, and general ledger accounts is critical for ensuring accuracy in financial reporting. This process helps identify discrepancies, correct errors, and maintain clean financial records.

Tip: Automate reconciliation processes where possible, but ensure a final manual review for completeness.

3. Close the Books

Year-end book closing is essential for financial accuracy. It involves finalizing all transactions, posting adjustments, and ensuring all financial activity for the year is accurately recorded. This step is vital for generating year-end financial statements.

Tip: Develop a closing checklist that includes steps like reviewing journal entries, confirming payroll records, and resolving any outstanding transactions.

4. Review Tax Liabilities and Prepare for Tax Season

Taxes are one of the most significant responsibilities for businesses. Reviewing tax liabilities, ensuring compliance with regulations, and gathering necessary documentation help avoid last-minute surprises. Consider consulting a tax advisor to explore opportunities for deductions or credits.

Tip: Make estimated tax payments to avoid penalties and ensure all relevant forms (e.g., 1099s for contractors) are ready for submission.

5. Conduct a Financial Performance Analysis

Analyze the company’s financial performance over the past year by reviewing profit margins, expense trends, and key performance indicators (KPIs). This analysis provides insights into what worked, what didn’t, and areas that need improvement. Ideally, this analysis is performed monthly, which would allow to correct deviations throughout the year. The exercise of the an annual analysis of this type is to ‘close the loop’ and give enough time to close some temporary differences that might come due to timing.

Tip: Use data visualization tools to create clear, actionable insights that can be shared with stakeholders.

6. Assess Cash Flow and Liquidity

Year-end is an excellent time to review cash flow and liquidity to ensure the company has sufficient funds to cover operating expenses, payroll, and debt obligations in the coming months. When the new year starts, some departments might need to renew services from third parties, so cash outflows might be greater at the beginning of the year. Assessing cash reserves also helps identify opportunities for reinvestment.

Tip: Create a rolling cash flow forecast to monitor short-term liquidity needs.

7. Review Outstanding Receivables and Payables

Ensure that all outstanding invoices are collected and vendor payments are processed before year-end. Cleaning up receivables improves cash flow, while timely payments strengthen vendor relationships.

Tip: Implement an aging report for receivables and prioritize collections from overdue accounts.

8. Update Fixed Asset Records

Review and update your fixed asset records, including depreciation schedules. This ensures compliance with accounting standards and accurate reporting of the company’s net asset value. Write off or dispose of obsolete assets where applicable.

Tip: Use asset management software to streamline tracking and reporting.

9. Plan for Employee Bonuses and Incentives

If your business offers year-end bonuses or incentives, ensure the necessary funds are allocated and the payments are processed before year-end. Communicate with HR to align financial planning with employee expectations.

Tip: Consider offering non-monetary rewards alongside cash bonuses to motivate and retain top talent.

10. Review and Update Financial Policies

The end of the year is an excellent time to review financial policies and procedures to ensure they remain effective and compliant with regulations. Update expense policies, approval workflows, and internal controls as needed.

Tip: Conduct an internal audit or risk assessment to identify gaps and opportunities for improvement.

Conclusion

The end of the year is a critical period for businesses to reflect on their financial health and lay the groundwork for success in the coming year. By prioritizing these 10 tasks, the finance department can ensure accurate financial records, regulatory compliance, and strategic alignment with company goals.

Completing these tasks isn’t just about tying up loose ends—it’s about creating a foundation for informed decision-making, financial stability, and long-term growth. With thorough preparation, businesses can step into the new year with confidence, ready to tackle challenges and seize opportunities.

Whether it’s finalizing budgets, preparing for tax season, or closing the books, taking a proactive approach now will pay dividends in the months to come.