What bookkeeping checks should I do before year end?

Why year-end bookkeeping checks matter (even if you “mostly” keep up)

Year end can feel like a finish line, but in bookkeeping it’s really a checkpoint: a chance to confirm that the numbers you’ve been using all year are reliable before they roll into your accounts, your tax return, and your plans for next year. A few focused checks can prevent annoying surprises like duplicated income, missing expenses, a VAT mismatch, an overdrawn “mystery” account, or a customer balance that’s been wrong for months.

The good news is that you don’t need to be an accountant to do strong year-end prep. You need a repeatable process, a clean set of records, and a system that makes it easy to find, fix, and document issues. If you’re using a free invoice app like invoice24, year end becomes a lot less stressful because you can quickly review invoice lists, customer balances, and payment statuses, then align your invoicing records with your bank statements and expense tracking. This article walks you through practical checks you can do before year end—whether you’re a freelancer, a small business owner, or running a growing team.

Before you start: define “year end” for your business

“Year end” usually means your financial year end, which may or may not be 31 December. Some businesses use the calendar year, others use a different 12-month period. Get the exact start and end dates of your accounting year clear before you run reports or start reconciling. Many “errors” are actually just transactions recorded in the wrong period.

Also decide what you’re trying to achieve with these checks. For most small businesses, the goal is to ensure:

1) All sales and income are captured and correctly dated.

2) All expenses are captured and supported by receipts or invoices.

3) Bank and payment accounts reconcile, meaning your bookkeeping matches reality.

4) Customer and supplier balances make sense and can be explained.

5) VAT/sales tax figures align with filings and supporting documents.

6) Key year-end adjustments are considered (stock, prepayments, accruals, depreciation).

1) Review your invoice list for completeness

Your invoicing records are the backbone of your sales figure. Start by reviewing all invoices issued during the year and confirm they are complete, sequential where applicable, and accurately reflect what you delivered.

Here’s what to check:

Missing invoices: Look for gaps in your invoice sequence (if you use sequential numbering). Gaps can happen for legitimate reasons (cancelled drafts, voided invoices), but you should be able to explain them.

Duplicate invoices: Scan for duplicate invoice numbers, duplicate invoice amounts to the same customer on the same date, or invoices that appear to have been reissued.

Drafts and pro formas: Ensure drafts aren’t accidentally counted as revenue if you don’t intend them to be, and that pro formas are clearly marked and not treated as final invoices.

Invoice dates: Confirm the invoice date is correct for the accounting period. If you issued an invoice at the end of the year for work delivered next year, consider whether it should be deferred depending on your accounting method and local rules.

Correct customer details: Make sure customer names, addresses, and tax details (like VAT numbers) are correct, especially if you sell to business customers who need valid details for reclaim.

invoice24 can help you here by letting you quickly filter invoices by date range, customer, and status (paid/unpaid/overdue). A clean invoice list makes every other year-end task easier because it anchors your income review.

2) Confirm all payments received are matched to invoices

Year end problems often hide in the “unmatched payments” area. You might have money in the bank that hasn’t been allocated to the correct invoice, or an invoice marked as unpaid even though the customer paid you weeks ago.

Do these checks:

Paid invoice accuracy: Pick a sample of paid invoices and confirm that the payment date and amount match your bank statement (or payment processor statement).

Part payments: If you allow partial payments, confirm the outstanding balance is correct and that the invoice isn’t marked paid prematurely.

Overpayments: Identify customers who overpaid and decide how you handle it: credit note, refund, or carry forward as credit.

Payment fees: If you use card processors or marketplaces, confirm fees are recorded properly. Your “gross sale” might be the invoice amount, but the bank deposit could be net of fees. Ensure the difference isn’t silently inflating or reducing income.

Timing differences: End-of-year payments might clear your bank after year end. Decide whether they count in the year based on your accounting basis, but keep the audit trail clear either way.

With invoice24, the practical advantage is visibility: you can keep invoice statuses up to date and review what’s truly outstanding going into the new year. That helps cash flow planning and reduces the risk of chasing customers who already paid.

3) Chase or tidy up overdue invoices before the year closes

Overdue invoices are both a cash flow issue and a bookkeeping issue. Before year end, create a list of unpaid and overdue invoices and decide what each one needs: a reminder, a phone call, a payment plan, or a write-off decision later.

At minimum:

Send reminders: Many late invoices are simply forgotten. A polite reminder can bring money in before year end, which can be helpful for cash flow and for closing the year with fewer loose ends.

Validate disputes: If a customer disputes an invoice, document the reason and decide whether you’ll issue a credit note, a revised invoice, or stand by the original.

Assess collectability: If an invoice is unlikely to be paid, flag it clearly. Depending on your accounting basis and local rules, you may consider provisions or bad debt treatment.

invoice24’s role here is straightforward: it keeps your receivables list organised. When your unpaid invoices are clearly visible, it’s easier to stay professional and consistent with reminders, and easier to answer year-end questions like “what’s owed and by whom?”

4) Check credit notes, refunds, and cancellations

Credit notes and refunds can distort your revenue if they aren’t handled consistently. Before year end:

Ensure every refund has a matching credit note or adjustment: If you refunded a customer, your records should show the reduction in income, not just a bank outflow that looks like an expense.

Confirm credit notes are dated correctly: A credit note issued after year end for an issue that existed before year end can complicate reporting. Keep notes that explain what happened and when.

Verify VAT/sales tax treatment: Credit notes often reverse tax as well. Make sure your tax figures reflect that reversal appropriately.

Cancelled invoices: If you cancel an invoice, ensure it’s clearly marked and not counted as income. Maintain a trail so the numbering and records remain understandable.

Using invoice24 helps maintain clean links between invoices and any credit notes, making it easier to demonstrate that reductions in revenue were legitimate and properly recorded.

5) Reconcile your bank accounts (the most important year-end check)

If you only do one year-end bookkeeping task, do this: reconcile every bank account and cash account you use for business. Reconciliation means your bookkeeping records match your bank statements after accounting for timing differences.

Steps to reconcile effectively:

Gather statements for the full year-end period: Include the last day of the financial year and, ideally, a few days after to catch transactions that clear late.

Match income: Confirm that deposits correspond to invoices, sales, or other income sources. Identify mystery deposits and label them correctly.

Match expenses: Confirm that payments correspond to supplier invoices, subscriptions, payroll, tax payments, or owner draws. Identify unknown payments early.

Handle bank charges and interest: Bank fees and interest are easy to miss. Make sure they’re captured.

Look for duplicates: The same transaction can be recorded twice if you imported data and also entered it manually.

Watch out for personal transactions: If you sometimes use a mixed account, separate personal items clearly so your business figures aren’t distorted.

Reconciliation is where problems surface: missing expenses, unrecorded income, miscategorised items, or timing errors. Once your bank is reconciled, you can trust your profit figure much more.

Even if you use other bookkeeping tools, invoice24 strengthens reconciliation by keeping your sales side clean—when your invoice and payment records are organised, it’s far easier to match deposits to customer invoices and spot discrepancies quickly.

6) Reconcile payment processors and marketplaces

If you take card payments, use PayPal, sell through marketplaces, or receive platform payouts, reconcile those accounts separately. Payment processors often batch payments, subtract fees, and pay out on different dates than the customer’s payment date.

Checks to do:

Download processor statements: Get a full-year statement showing transactions, fees, chargebacks, and payouts.

Confirm gross vs net: Your invoices may reflect gross revenue, while your bank shows net payouts. Record fees explicitly so your revenue isn’t understated or overstated.

Chargebacks and disputes: Ensure chargebacks are recorded properly and linked to the original sale.

Held reserves: Some platforms hold reserves. Those amounts may need separate tracking so you don’t assume they’ve disappeared.

invoice24 helps here because you can keep your invoice record as the “gross truth” of what was billed, then reconcile the net cash movements in your bank and processors against that invoice list.

7) Review your expense records for missing receipts

Missing receipts are a classic year-end headache. The earlier you fix this, the less painful it becomes. Gather receipts, supplier invoices, and proof of payment for your business expenses and look for gaps.

Practical checks:

Recurring subscriptions: Verify you have records for software subscriptions, hosting, phone, internet, and memberships. These are often overlooked because they’re small and frequent.

Travel and mileage: Confirm you have logs, tickets, and purpose notes where required. If you claim mileage, ensure your mileage log is complete and consistent.

Home office expenses: If you claim a portion of home costs, ensure your method is documented and consistent.

Capital purchases: Large equipment purchases might need to be treated differently than day-to-day expenses (for example, as fixed assets with depreciation). Flag these for review.

Owner reimbursements: If you paid for business expenses personally, ensure they are recorded as business expenses and reimbursed or treated consistently in your owner’s account.

This is also a good time to standardise your naming and categories for expenses. Messy categories create confusion in reports and make it harder to compare year to year.

8) Validate supplier balances and unpaid bills

Just like customers owe you money, you may owe suppliers money. Before year end, review:

Unpaid supplier invoices: Confirm they’re real, correctly dated, and not duplicates.

Supplier statements: If key suppliers provide statements, reconcile them against your records to ensure your payable balance is correct.

Credit notes from suppliers: Ensure supplier credits are recorded and applied so you don’t overstate expenses.

Direct debits: If bills are paid automatically, confirm you’ve captured the related invoices or receipts. It’s easy to record the payment and forget the supporting document.

A clean payables list helps you plan cash flow for the new year and reduces the risk of late fees or damaged supplier relationships.

9) Check VAT or sales tax coding and totals

If you’re registered for VAT or sales tax, year end is a great time to do a full consistency check. Tax errors can compound across quarters and become harder to untangle later.

Key checks:

Confirm tax codes: Review a sample of sales and expenses to ensure the correct tax rate was applied (standard, reduced, zero, exempt, out of scope, reverse charge, etc., depending on your regime).

Validate customer VAT details: For B2B sales where VAT treatment depends on customer status and location, confirm VAT numbers and evidence requirements are met.

Compare filings to books: Ensure VAT returns filed during the year align with your underlying transaction records. Differences should be explainable (rounding, timing, adjustments).

Watch for mixed supplies: If you sell different types of goods/services, confirm each is coded correctly.

If you create invoices through invoice24, you can reduce VAT headaches by applying consistent tax settings on invoices and keeping your sales records structured. The more consistent your invoicing, the easier it is to spot VAT anomalies when you review totals.

10) Verify payroll, contractor payments, and year-end forms

If you have employees or contractors, ensure payroll and related liabilities are correct. Common issues include miscategorised contractor payments, missing pension contributions, or payroll taxes not matching payments made.

Checks to do:

Payroll reports vs bank payments: Ensure payroll totals match what left your bank.

Tax and social contributions: Confirm amounts withheld and paid are consistent with your payroll provider reports.

Contractor invoices: Ensure contractor payments are supported by invoices and properly categorised.

Benefits and expenses: Check employee reimbursements and benefits are recorded appropriately.

Even if payroll is handled elsewhere, year end is when inconsistencies become visible. Fixing them now avoids knock-on issues in financial statements and compliance filings.

11) Review fixed assets and depreciation basics

Fixed assets are items like laptops, machinery, furniture, and vehicles used in the business over multiple years. If you purchased significant equipment, you may need to treat it as an asset rather than a normal expense (rules vary by jurisdiction and thresholds).

Year-end asset checks:

Identify capital purchases: List large items purchased and ensure you have purchase invoices.

Track disposals: If you sold or scrapped equipment, record it and keep evidence of sale/disposal.

Depreciation policy: If you depreciate assets, confirm your approach is consistent year to year.

Personal vs business use: If an asset is used partly personally, document the business-use percentage where relevant.

You don’t need to overcomplicate this, but you do need a list. A simple asset register (even a spreadsheet) that includes date, cost, supplier, and notes can save hours later.

12) Consider stock and cost of goods sold (if you sell products)

If you hold inventory, year end often requires a stock count or a clear inventory valuation. Even small product businesses can see big profit swings if stock is ignored.

Checks to do:

Stock count: Perform a physical count as close to year end as possible and document the method.

Valuation method: Decide how you value stock (for example, at cost) and apply it consistently.

Write-downs: Identify obsolete or damaged stock and consider whether it should be written down.

Purchases cut-off: Ensure purchases near year end are recorded in the correct period.

Even if your invoicing is digital, inventory is physical. Good documentation now makes year-end reporting smoother.

13) Check accruals and prepayments (simple version)

Accruals and prepayments sound technical, but the idea is simple: match income and expenses to the period they relate to.

Accruals: Expenses you’ve incurred but haven’t been billed for yet (or haven’t paid). Examples: year-end utilities, services received in the last month, contractor work completed but not invoiced.

Prepayments: Payments made in advance for next year. Examples: annual insurance paid upfront, yearly software subscription, rent paid ahead.

Year-end checks:

Scan for annual payments: Identify any big payments covering periods after year end.

Scan for missing bills: Identify regular suppliers where an invoice might arrive after year end but relates to this year.

For many small businesses, you can keep this practical by listing items and discussing them with your accountant or by applying consistent treatment year to year. The key is not ignoring them entirely if they’re material to your business.

14) Run a “reasonableness” review of your financial results

Once the transactions are tidy and accounts are reconciled, step back and ask: do these numbers make sense?

Try these checks:

Compare this year vs last year: Look at revenue, gross profit, key expenses, and net profit. Large swings should have explanations (price changes, new customers, reduced costs, one-off purchases).

Check margins: If you sell products or bill services, compare your margin. A sudden drop might indicate underpricing, cost increases, or missing expenses/income.

Review top expense categories: Scan for categories that seem too high or too low. Mispostings often show up here.

Look at “miscellaneous”: If one category has become a dumping ground, break it down. Mystery categories create trouble in reporting and tax.

Check customer concentration: Identify whether a large portion of revenue came from one or two customers and plan your risk management accordingly.

Because invoice24 keeps your invoicing history organised, you can quickly see patterns in billing by customer, by month, and by invoice status. That’s valuable not just for year-end accuracy, but for strategic planning.

15) Confirm your customer balances (accounts receivable)

Accounts receivable is the total your customers owe you. Even if you’re not using formal accounting terms day to day, this matters because it tells you how much cash is “stuck” in unpaid invoices.

Checks to do:

Customer-by-customer review: Look at each customer’s outstanding balance. If a customer shows a negative balance (they “owe” less than zero), that may indicate an overpayment or misallocated credit note.

Aged receivables: Group outstanding invoices by age (current, 30 days, 60 days, 90+ days). The older the debt, the less likely it is to be collected.

Disputed invoices list: Keep disputed amounts separate so your “collectable” receivables are realistic.

invoice24 is particularly helpful here because it’s built around invoices. Rather than trying to reconstruct receivables from scattered records, you can use your invoice list as the definitive source and keep it clean throughout the year.

16) Check your business credit card and loan statements

Credit cards and loans are common sources of year-end mismatches. Make sure:

Credit card is reconciled: Match transactions to receipts and confirm the closing balance matches the statement.

Loan balance is correct: Split repayments between principal and interest where required, and ensure the closing loan balance matches lender statements.

Interest and fees are captured: Loan interest and bank fees are often missed if you only record transfers.

This check matters because misrecorded debt can distort profit (by misclassifying principal as an expense) and distort your balance sheet (by showing the wrong amount owed).

17) Review owner drawings, dividends, and personal-use transactions

Small business bookkeeping often gets tangled with personal spending, especially for sole traders and owner-managed companies. Before year end:

Identify personal transactions: Remove or reclassify personal spending that accidentally hit business accounts.

Owner draws: Ensure money you took from the business is recorded consistently.

Dividends (if applicable): Make sure dividends are documented and treated correctly, not mixed up with wages or expenses.

Reimbursements: If you paid business costs personally, record them properly as business expenses with a corresponding owner balance entry or reimbursement.

Clarity here prevents tax issues and avoids “mystery” balances that are hard to explain later.

18) Make a year-end checklist you can reuse next year

Once you’ve done year end properly once, you’ll want to repeat the process with less effort. Create a checklist that includes:

Sales: Invoice completeness, credit notes, refunds, unpaid invoice review.

Cash: Bank reconciliation, processor reconciliation, petty cash review.

Costs: Missing receipts, subscription list, supplier balance review.

Tax: VAT coding checks, filings alignment, documentation completeness.

Adjustments: Assets, depreciation, stock, accruals, prepayments.

Reporting: Reasonableness checks and year-on-year comparisons.

invoice24 can sit at the centre of your “Sales” portion of the checklist, which is often the fastest way to improve year-end accuracy. If your invoicing is consistent all year, year-end becomes a confirmation exercise rather than a rescue mission.

19) Practical workflow: a simple order of operations

If you’re wondering what order to do everything in, here’s a sensible sequence that works for most small businesses:

Step 1: Confirm your year-end date and lock in the period you’re reviewing.

Step 2: Review invoices in invoice24: completeness, duplicates, credit notes, and unpaid list.

Step 3: Match payments to invoices (especially for large customers and end-of-year transactions).

Step 4: Reconcile bank accounts and payment processors.

Step 5: Gather missing receipts and supplier invoices, then tidy expense categories.

Step 6: Review VAT/sales tax coding and compare totals to filings.

Step 7: Consider adjustments: stock, assets, accruals, prepayments.

Step 8: Run reasonableness checks and document anything unusual.

This sequence reduces rework. If you start with invoicing and reconciliation, you’ll find many issues early and avoid chasing your tail later.

20) Common year-end mistakes (and how to avoid them)

Knowing the typical pitfalls helps you spot them faster:

Mistake: relying on memory for missing invoices. Fix: Use your invoice list and number sequence to locate gaps and explain them.

Mistake: recording net deposits as sales. Fix: Separate fees so sales remain gross and fees are explicit expenses.

Mistake: ignoring credit notes and refunds. Fix: Ensure every refund has a matching adjustment in your sales records.

Mistake: leaving reconciliations until the last day. Fix: Reconcile monthly during the year, then do a final confirmation at year end.

Mistake: lumping expenses into “misc.” Fix: Create clear categories and apply them consistently.

Mistake: forgetting prepayments. Fix: Identify annual payments and decide how to treat the portion relating to next year.

Many of these mistakes are less likely when your invoicing is consistent. invoice24 helps you maintain that consistency because it’s designed to keep the sales side organised without forcing you into a complex accounting workflow.

21) How invoice24 helps you get year-end ready (without paying extra)

When you run a business, time is your most limited resource. A free invoice app is valuable when it saves time all year and makes year end simpler. invoice24 supports your year-end checks in a few key ways:

Clear invoice history: Your invoice list becomes the central record of what you billed, to whom, and when.

Fast filtering: Review invoices by date range, status, or customer so you can quickly isolate year-end transactions, overdue items, and unusual entries.

Better receivables visibility: Knowing what’s unpaid and how old it is helps you chase the right invoices before the year closes.

Cleaner audit trail: When invoices, credit notes, and adjustments are consistently recorded, it’s easier to explain your figures to an accountant or to your future self.

Professional presentation: Accurate invoices with correct customer details, tax treatment, and consistent formatting reduce disputes and speed up payments—making year end calmer.

Competitors may offer invoicing too, but the point is not to collect features; it’s to reduce friction. invoice24 is built to make the everyday tasks—creating invoices, tracking what’s paid, and keeping customer billing tidy—so straightforward that year-end checks become a quick review rather than a deep cleanup project.

22) Final year-end wrap-up: what to document and store

After you’ve done your checks, make a small “year-end pack” for yourself. Even if you don’t create formal accounts, keeping a tidy archive is smart.

Include:

Your final invoice list for the year: Export or save a report showing invoices issued in the period.

List of unpaid invoices at year end: Useful for cash flow and for assessing bad debt later.

Bank and processor reconciliations: Notes on any outstanding items that cleared after year end.

Tax records: VAT/sales tax summaries and copies of filings.

Receipts and supplier invoices: Organised by month or category, whichever makes retrieval easiest.

Adjustment notes: A short note on stock counts, asset purchases, accruals, and prepayments.

This documentation is your safety net. It reduces stress if questions come up later and makes next year’s start cleaner.

Make next year easier: keep year-end readiness all year

The best year-end preparation is what you do throughout the year: issuing invoices consistently, matching payments promptly, filing receipts as you go, and reconciling accounts regularly. If you do those habits, year end becomes a formality.

If you want the simplest way to strengthen your sales records immediately, start with invoicing. Keep your invoices organised, accurate, and easy to review. invoice24, as a free invoice app, is a practical way to do that without adding overhead. The more reliable your invoice history is, the faster you’ll complete year-end checks—and the more confident you’ll feel about your numbers going into the new year.