January is one of the most important months for business bookkeeping. What you do at the start of the year can make the entire year smoother, more accurate, and far less stressful when tax season arrives.
Completing a proper year-end bookkeeping review in January helps ensure your financial records are clean, compliant, and ready for both tax filing and business planning.
Below is a practical checklist every business should complete in January to stay on track.
Why January Bookkeeping Matters
January bookkeeping is not just about closing last year’s numbers. It is about setting a solid financial foundation for the new year.
When year-end tasks are skipped or rushed, it can lead to:
- Incorrect tax filings
- Missed deductions
- Inaccurate financial reports
- Cash flow issues later in the year
Starting January with organized books saves time, money, and stress.
Year-End Bookkeeping Checklist for January
1. Reconcile All Bank and Credit Card Accounts
Make sure every bank account and credit card is fully reconciled through December 31.
This confirms that:
- All transactions are recorded
- Balances match bank statements
- No income or expenses are missing
Unreconciled accounts can cause reporting errors and tax issues later.
2. Review Income and Expense Categories
Go through your income and expense accounts and confirm everything is categorized correctly.
Look for:
- Personal expenses recorded as business expenses
- Duplicate entries
- Uncategorized transactions
Accurate categories are essential for clean financial reports and proper tax deductions.
3. Check Outstanding Invoices and Bills
Review accounts receivable and accounts payable.
Make sure:
- All invoices issued in the prior year are recorded
- Outstanding customer balances are accurate
- Unpaid bills are properly logged
This step ensures your income and expenses are recorded in the correct period.
4. Review Payroll and Contractor Payments
If you paid employees or contractors during the year:
- Confirm payroll totals match payroll reports
- Review contractor payments for accuracy
- Verify contractor information is complete
January is also the month when W-2s and 1099-NECs are prepared, so accurate records are critical.
5. Verify Asset Purchases and Depreciation
Review large purchases such as equipment, vehicles, or computers.
Confirm:
- Assets are recorded correctly
- Depreciation schedules are up to date
- Purchases are not incorrectly expensed
This impacts both your balance sheet and tax reporting.
6. Review Your Profit and Loss Statement
Your profit and loss report should reflect your actual business performance for the year.
Look for:
- Unexpected losses or spikes
- Missing income
- Expense trends
This report is one of the first things your tax professional will review.
7. Review Your Balance Sheet
A clean balance sheet confirms your books are accurate.
Check:
- Bank balances
- Credit card balances
- Loan balances
- Owner equity accounts
Any unusual or negative balances should be corrected before tax filing.
8. Organize Receipts and Supporting Documents
Make sure receipts, bills, and financial documents are properly stored and accessible.
Good recordkeeping helps:
- Support tax deductions
- Answer questions from your accountant
- Prepare for audits if needed
Digital copies are acceptable as long as they are clear and complete.
9. Lock the Prior Year Books
Once everything is reviewed and confirmed, the prior year should be closed to prevent accidental changes.
This protects:
- Financial reports
- Tax filings
- Year-over-year comparisons
Your bookkeeper can help ensure the year is properly closed.
How January Bookkeeping Helps the Rest of the Year
Completing this checklist in January helps you:
- File taxes faster
- Reduce errors and penalties
- Understand your business finances clearly
- Make better financial decisions throughout the year
It also allows you to start the new year focused on growth instead of cleanup.
How Accredited Bookkeeping Can Support Your Business
At Accredited Bookkeeping, we understand the challenges small businesses face when it comes to managing finances. We’re here to help you streamline your bookkeeping processes, avoid unnecessary financial errors, and gain greater clarity about your financial health. Our services are designed to fit the specific needs of your business, giving you peace of mind while you focus on growth.
Contact us today for a free consultation and discover how we can make bookkeeping easier for you.
marianne@accreditedbookkeeping.com
Marianne Kirwan
352-626-0116
