Year end for contractors
Close the year in the order it has to happen.
Most of what makes year end painful is not difficult — it is just done too late. This is the whole sequence, month by month, with the one rule that matters: everything that can still change the outcome closes with December 31.
The 24-Hour Guarantee— Your first month back in 24 hours, or the next month is free.
The two dates that do not move
- January 31 — W-2s to employees and the SSA
- January 31 — 1099-NECs to subcontractors and the IRS
Everything else runs on rules rather than fixed dates. The full federal calendar is on the tax deadline page.
The sequence
Four phases, and only one of them has a hard deadline.
Work down the list. Each item links to how it is actually done.
October – November
You are hereGet the books current, while there is still time to act
Everything else on this page assumes the numbers exist. If the books are months behind, this is the only task that matters — and it is the one that gets more expensive every week it waits.
Close every month up to now
Every account reconciled, every transaction coded to a job. A year closed in November can still be acted on; a year closed in March can only be filed.
How catch-up work actually goesScore the books before your CPA does
Twelve questions, a score out of 100, and the gaps that matter most — in the order they matter.
Take the health checkCheck every subcontractor has a W-9 on file
Find the gaps now, while you can still withhold a payment to get the form. In January you are chasing people who have no reason to answer.
Who needs a 1099Pull subcontractor insurance certificates
Note which expired mid-year. Uninsured subs can land on your own payroll at the insurance audit.
The insurance audit
November – early December
The decisions that close with the year
December 31 ends the window on most of these. A half-hour conversation now is worth more than any meeting in the spring, because by then every decision has already been made for you.
Talk to your CPA while it can still change something
Twelve questions worth asking before the year closes — structure, owner pay, the last estimated payment, and what they need from you.
The twelve questionsSettle the equipment question honestly
A deduction is not a discount. Bringing a purchase forward is sensible only if you needed it anyway — and timing usually turns on being in service, not on the invoice date.
Buying equipment before year endGet the taxable extras into a payroll run
Personal use of a company truck, bonuses, gift cards, certain allowances. Added after the last payroll, they become corrected W-2s.
The year-end payroll checklistSet next year’s prices from this year’s costs
Overhead, burdened labor and realized margin by type of work. Decided now, it can be communicated before the year turns.
Setting next year’s prices
December
Close it cleanly
The last few weeks are mechanical. The aim is that nothing is still waiting to be recorded when the year ends.
Run the last payroll knowing nothing is outstanding
Names, addresses and Social Security numbers confirmed, and every taxable extra already in a run.
What goes in the last runCount inventory and truck stock
Materials on the shelf, parts on the trucks, coil and chemical in the yard. What is counted is what gets valued.
Truck stock and inventoryChase what you are owed before the holidays
Receivables, retainage with a release condition already met, and any unbilled change orders. All three get harder to collect in January.
Retainage explainedWrite next year’s one-page budget
Built from this year’s actuals rather than an impression of them.
The one-page budget
January – February
File, hand over, and start the year closing on time
Two statutory deadlines land on January 31, and they land on the same day for a reason: both depend on paperwork you were supposed to collect months ago.
W-2s and 1099-NECs out by January 31
To the recipients and to the agencies. Confirm in writing which of them your payroll provider actually files — 1099s are often not included.
If W-9s are still missingHand your CPA a finished file, not a shoebox
Reconciled accounts, a fixed asset list, loan balances, and the documents they ask for every year.
What your CPA needsGet ready for the insurance audits
Payroll by classification code, plus payments to any sub who could not produce a certificate.
Surviving the workers comp auditClose January on time — that is the whole fix
Every year-end scramble is twelve months of postponed closes arriving at once. The way out is closing the month after it ends.
The monthly checklist
If you are reading this in January
Behind is normal. It is also fixable faster than you think.
Nobody who does this work for a living is surprised by books that are months behind — it is how most contractors arrive. The work is mechanical rather than forensic, because the statements come from the bank rather than from your memory.
Year-end questions
The short answers.
- When should a contractor start year-end bookkeeping?
- November. Everything that can still change the outcome — structure, owner pay, the last estimated payment, equipment timing, getting taxable extras into payroll — closes with December 31. Work started in March can only be filed, not acted on.
- What are the January 31 deadlines?
- W-2s are due to employees and to the Social Security Administration, and 1099-NECs are due to contractors and to the IRS. Both land on the same day, and both depend on paperwork — Social Security numbers and W-9s — that should have been collected months earlier.
- My books are months behind. Is it too late?
- No. Catch-up work is routine and it is almost always smaller than it feels, because it is mechanical: statements come from the bank, not from your memory. Start with the most recent month and work backwards.
- Should I buy equipment before the year ends to reduce tax?
- Only if you needed the equipment anyway. A deduction reduces taxable income; it does not refund what you spent, so you get back a fraction of the cost. If the purchase was coming regardless, ask your CPA which year it belongs in before you sign.
Start the new year with a month that closed on time.
We do your most recent month in full, free — reconciled, job-costed and signed by a US CPA, back within 24 hours. No card, no contract, and you keep the work either way.