Practical year-end bookkeeping preparation for contractors and service businesses
November is here, and for many contractors and service business owners, the calendar is already filling up.
There are jobs to finish, customers to invoice, employees to pay, and holiday schedules to coordinate. Preparing your books for year-end may not be at the top of your list.
But here's something worth considering: The work you do in November can make December and tax season much easier.
You don't have to wait until December 31 to start preparing. Taking care of a few important tasks now gives you time to address questions, gather missing documents, and avoid unnecessary last-minute surprises.
If you've been following our recent articles, Behind on Your Bookkeeping? How to Catch Up Before Year-End and Your Books Are Up to Date, But Are They Accurate?, you've already learned why current and accurate financial records matter.
Now let's look at what comes next.
1. Review Outstanding Customer Invoices
You've completed the work, sent the invoices, and moved on to the next job. But have all those customers paid?
Before December arrives, review your Accounts Receivable Aging Report in QuickBooks Online.
Pay particular attention to:
Invoices more than 30, 60, or 90 days overdue.
Completed jobs that haven't been invoiced.
Customers who have made partial payments.
Outstanding balances that may require follow-up.
For example, an HVAC contractor may have several completed installations with unpaid balances. Those invoices represent money the business is expecting, but that money isn't available to pay employees, suppliers, or other expenses until customers pay.
Profit on paper doesn't necessarily mean cash in the bank.
Following up on unpaid invoices now can help improve cash flow before year-end.
2. Review Unpaid Bills and Upcoming Expenses
Just as customers owe your business money, your business may owe money to suppliers, subcontractors, and other vendors.
Review your Accounts Payable Aging Report to identify unpaid bills and upcoming obligations.
Ask yourself:
Are there supplier invoices that haven't been entered?
Are any bills past due?
Do you have large payments coming due in December?
Will you have enough available cash to cover payroll and operating expenses?
For contractors, material purchases and subcontractor payments can add up quickly.
Knowing what's coming due helps you plan your cash flow rather than discovering an unexpected shortage during the holidays.
3. Gather Loan and Equipment Records
Did your business purchase a new truck, trailer, piece of equipment, or other major asset this year?
Did you finance any of those purchases?
Now is a good time to gather the paperwork.
Important documents may include:
Equipment purchase invoices and receipts.
Loan agreements and financing statements.
Records of equipment sold or traded.
Documentation showing when equipment was placed into service.
These records help your bookkeeper properly account for equipment purchases, loans, and related transactions.
For example, if you financed a $65,000 service truck, the entire purchase generally shouldn't be recorded as an ordinary operating expense. The truck, loan, interest, and principal payments may require different accounting treatment.
Your CPA can determine the appropriate tax treatment, including any available depreciation deductions.
4. Check Payroll and Subcontractor Information
If you have employees or hire subcontractors, November is a good time to review their information.
For employees, confirm that names, addresses, payroll records, and year-to-date wages are accurate.
If you use an outside payroll provider, make sure you know how to obtain the reports your bookkeeper and CPA will need.
For subcontractors, review your vendor list and confirm that you have completed Forms W-9 where needed.
For the 2026 tax year, the federal reporting threshold for many payments reported on Form 1099-NEC increased to $2,000, subject to applicable reporting rules and exceptions.
Don't assume every subcontractor requires a 1099. Payment methods, business classifications, and other factors can affect reporting requirements.
Review potential filing obligations with your CPA before January arrives.
5. Make a List of Questions for Your CPA
Your CPA shouldn't be someone you contact only when it's time to file your tax return.
November is an opportunity to ask questions while there's still time to make informed decisions.
Consider asking:
Should I review any major equipment purchases before year-end?
Are there tax considerations for outstanding invoices or unpaid bills?
What documents will you need to prepare my business tax return?
Are there any year-end decisions I should make before December 31?
Your bookkeeper can help prepare accurate financial information, while your CPA provides guidance on tax treatment and planning.
When your bookkeeper, CPA, and business owner communicate, everyone has better information to work with.
Start Preparing Now, Not December 31
Year-end preparation doesn't have to mean spending an entire weekend buried in paperwork.
Start with your outstanding invoices and unpaid bills. Gather your loan and equipment records. Check payroll and subcontractor information, and make a list of questions for your CPA.
A little preparation now can make year-end less stressful and help you begin 2027 with a clearer understanding of your business finances.
Need help getting your books ready for year-end?
At Reliant Ledger, we work with contractors and service business owners to maintain accurate bookkeeping, prepare meaningful financial reports, and organize the financial information their CPAs need.
Schedule a Complimentary Discovery Call to learn how we can help you prepare for year-end and beyond.
Better books. Better decisions. Better business.