December 31 is a hard line. Anything your books get wrong before it either costs you money in April or costs your CPA hours you pay for. Most of the fixes take a few hours each if you start in November. They take weeks if you start in March.
This is the year-end close checklist we run for Maryland small business clients. It is split into three windows: what to do now, what to do in the last week of December, and what to finish in January. It assumes calendar-year filing.
Window 1: November to mid-December.
These are the tasks that need lead time. Some depend on vendors, banks, or employees getting back to you.
1. Reconcile every account through November 30.
Every bank account, credit card, PayPal, Stripe, Square, and loan account. Not just the operating account. If an account has not been reconciled since summer, you want to find that gap now, not in the last week of the year when your bank’s support line is closed for the holidays.
2. Clear the “uncategorized” and “Ask My Accountant” accounts.
In QuickBooks, these two accounts are where year-end problems hide. Pull a report of every transaction in both, sort by amount, and work from the top down. A $9,000 uncategorized deposit could be revenue, a loan, or an owner contribution. Each one has a very different tax result.
3. Collect W-9s from every contractor you paid this year.
Starting with payments made in 2026, the federal 1099-NEC and 1099-MISC reporting threshold rose from $600 to $2,000. Fewer contractors will need a form. That does not remove the need for a W-9. You still need a name, address, and taxpayer ID on file to decide who crosses the line, and to avoid backup withholding problems later.
Run a vendor report for 2026 payments, filter for anyone at or near $2,000, and send W-9 requests now. Contractors paid by credit card or through platforms like PayPal for goods and services are generally reported by the payment processor on a 1099-K instead, so tag those separately.
4. Review owner pay if you are an S-Corp.
S-Corp owners who work in the business need to take reasonable W-2 compensation through payroll, not only distributions. If the year’s salary looks low compared to distributions, the fix has to run through payroll before December 31. It cannot be backdated in January.
5. Decide on equipment purchases with your CPA.
Equipment, vehicles, and software only count for 2026 if they are bought and placed in service by December 31. A truck sitting at the dealer on New Year’s Eve does not count. Talk to your CPA before you buy anything just for the deduction. Spending $40,000 to save $10,000 in tax only makes sense if you needed the asset anyway.
Want a second set of eyes on your books before December 31?
See the monthly reporting package we deliver to Maryland small business clients. Clean P&L, balance sheet, and a tax-ready summary your CPA can use as is.
Get the sample packageWindow 2: the last week of December.
These tasks are about capturing a snapshot of the business as of December 31. Some of them cannot be redone later.
6. Count inventory on December 31.
If you sell products, your ending inventory number drives cost of goods sold for the whole year. A physical count (or a cycle count backed by your POS system) on or near the 31st is the only defensible number. Write down who counted, when, and how.
7. Run payroll with the right dates.
Payroll counts in the year the employee is paid, not the year the work was done. A December 26 to January 8 pay period paid on January 9 is 2027 wages. If you plan year-end bonuses for 2026, they need to hit a pay date on or before December 31.
8. Write off bad debt you will not collect.
If you keep your books on the accrual basis, open invoices from customers who are clearly not paying should be reviewed before year-end. Document your collection attempts. Cash-basis businesses never booked that revenue, so there is nothing to write off.
9. Save the December 31 statements and balances.
Download year-end statements for every bank, credit card, loan, and line of credit. For loans, you need the principal balance on December 31 and the total interest paid in 2026. These are the numbers your CPA will ask for first.
Window 3: January (finish the close).
| Date | Task |
|---|---|
| Jan 15, 2027 | Q4 2026 federal and Maryland estimated tax payments for owners of pass-through entities and sole proprietors. |
| Feb 1, 2027 | W-2s and 1099-NECs due to recipients and to the SSA and IRS. The usual January 31 deadline falls on a Sunday in 2027, so it moves to Monday, February 1. Maryland W-2 copies and the MW508 annual withholding reconciliation go to the Comptroller of Maryland by the same date. |
| Feb 1, 2027 | Q4 Form 941 and annual Form 940 (federal unemployment) for employers. |
10. Reconcile December and close the period.
Once the December statements arrive, reconcile every account through December 31 and lock the period in QuickBooks. Closing the books with a password stops anyone (including you) from changing 2026 numbers after your CPA has them.
11. Tie payroll to the books.
Total wages on your four 941s should match the W-3 and the wage accounts on your P&L. If they do not, find out why before the W-2s go out. A mismatch here is one of the most common reasons for an IRS notice.
12. Build the fixed asset list.
List every asset bought in 2026 with the date placed in service, cost, and a copy of the invoice. Your CPA uses this for depreciation. Maryland also uses your business property for the annual Personal Property Return, so the same list does double duty.
Two Maryland items to put on the list.
The PTE election. If you own an LLC, S-Corp, or partnership, the Maryland pass-through entity tax election can turn state tax into an entity-level deduction. The decision is made each year with your return, but planning starts with clean year-end numbers. Our Maryland PTE election guide covers how it works.
The 2027 deadline calendar. The Comptroller of Maryland and SDAT deadlines do not all line up with federal ones. Our Maryland small business tax deadlines post lays them out in one calendar.
How we help.
At RS Accounting Services we run this exact close for Maryland small businesses every December and January. Clients finish the year with reconciled accounts, a locked period, and a tax-ready package their CPA (or our tax partner Veritax USA in Bethesda) can work from right away.
If your books are behind, November is the right time to catch up. Call us at (410) 694-7230 or book a free call below.
This article is general information, not tax advice. Talk to your CPA about how these rules apply to your business.