Almost every small business that prepares its own books makes the same five mistakes by December. None are catastrophic. All are fixable. And the difference between a tax engagement that takes 6 hours versus 16 is usually whether they got fixed in December or April.
Here's the checklist we run on every QuickBooks file we touch — and what you can clean up yourself before sending us anything.
1. Reconcile every bank and credit card account through December 31
If you didn't reconcile, your books are guesses. Reconciliation catches duplicate entries, missing transactions, and bank-side errors. QuickBooks's reconciliation tool will tell you exactly what's wrong if you give it the December statement and let it run.
Watch for: "Uncleared" transactions older than 60 days. Those are usually entries that were entered into QuickBooks but never actually hit the bank. Either the transaction never happened, or it cleared under a different amount.
2. Clean up the "Uncategorized Income" and "Uncategorized Expense" buckets
These are QuickBooks's catch-all bins for transactions the bank feed couldn't auto-categorize. By year-end, most files have hundreds of uncategorized transactions sitting in there. Each one needs a real category — or, more often, a vendor and a real category.
If you're not sure what something is, the rule we follow is: if it appears more than three times during the year, it gets its own category. Otherwise it goes to a generic "Office Supplies" or "Other."
3. Reclassify owner draws and contributions
Money you take out of the business is not an expense. Money you put in is not revenue. They're equity transactions and need to be coded as such (Owner's Draw, Owner's Contribution, or — for an S-Corp — a Distribution and a Contribution). This is the single most common error we see, and it directly distorts profit.
4. Verify payroll matches the W-3 / 941s
Total wages on QuickBooks should match the sum of your four 941s and your W-3 to the dollar. If they don't, something is misclassified — usually employer payroll taxes mixed up with employee withholding, or owner W-2 wages booked as a draw.
This is one of the first things the IRS checks if they're looking for issues. Fixing it in December is easy. Fixing it after a notice is much less easy.
5. Run an Accounts Receivable / Accounts Payable aging report
Anything in A/R older than 90 days is probably not getting collected. Anything in A/P older than 90 days is probably already paid via a different method. Both throw off your books and your tax position.
Write off uncollectable A/R. Investigate aged A/P — often the bill was paid with a credit card and the bill itself was never marked paid in QuickBooks.
6. Match 1099s to vendors
Any vendor you paid more than $600 in non-corporate services needs a 1099-NEC by January 31. QuickBooks has a 1099 preview report. Run it in December, not January, so you have time to chase down the W-9s you forgot to collect.
7. Lock the prior year
Once your books match what we file, set a closing date in QuickBooks (Edit → Preferences → Accounting → Company Preferences → Closing Date). This prevents you, your bookkeeper, or the bank-feed AI from accidentally editing prior-year transactions and throwing the return out of agreement with the books.
If you've never set a closing date, you'd be surprised how often a 2022 transaction quietly changes in March 2026 because someone clicked the wrong dropdown in the bank feed.
Run this list yourself and your tax engagement gets shorter, cheaper, and less stressful. If the list is intimidating, send us your QuickBooks file. Year-end cleanup is something we do all year.