As Cape Cod slips into its quieter season, Q4 is the perfect moment to review your finances and prepare for the new year.
Good accounting habits help you stay steady through Cape Cod’s natural ups and downs. With the right year-end accounting checklist, you can take stock of how your business did over the year, keep your cash flow smooth through winter, and enter tax season feeling well organized and confident.
Here’s a small business accounting checklist of steps we recommend for a strong finish to the year.
1. Close Out Your Books For The Year
Start by bringing your bookkeeping fully up to date. Reconcile all bank accounts and credit cards, review income and expense categories, and scan for missing or duplicate transactions. This one step makes everything else in Q4 much easier.
Restaurants may need to double-check inventory purchases and tip reporting, making Small Business Accounting practices essential. Retail shops often need to review vendor payments and shipping expenses. Service businesses should make sure invoices for fall projects have been properly recorded.
2. Ask Your CPA About Tip Reporting For 2025
If your business has tipped employees, take a few minutes in Q4 to review how tips are being recorded and reported, making Small Business Accounting practices more important than ever. While the core IRS rules have not changed, new federal requirements are beginning to roll in for 2025. Employees may qualify for a new federal deduction on up to $25,000 of tip income, which means accurate reporting will matter more than before.
Start by checking that your payroll records match what employees have been reporting throughout the year. Make sure you have monthly tip statements on file for anyone who regularly receives tips. If you use a point of sale system, confirm that the tip totals it captures match the IRS’ definition of voluntary tips vs auto-gratuities, which are treated as wages.
The IRS is treating 2025 as a transition year, so you will not be penalized if you have not yet adopted the new tip reporting fields. It is still helpful to prepare now. It’s best to work with your Cape Cod CPA on the finer details of how the federal deduction aligns with Massachusetts’ state tax treatment.
3. Review Your Profit And Loss Statement
Once your records are current, spend time reviewing your Profit and Loss statement to strengthen Small Business Accounting insights. Look for patterns in revenue and expenses, especially month by month, since the Cape’s business cycle is not evenly spread across the year.
Many local businesses rely on a strong summer season to carry them through the slower winter months. Comparing peak season results with off-season months helps you understand if pricing, labor, or inventory needs to be adjusted for next year.
If you operate a year-round business, pay attention to winter utility costs, maintenance expenses, and slower client activity so you can plan ahead.
Read our Guide to Year-End Retirement Contributions to make the most of your retirement savings before the year ends
4. Check Your Estimated Taxes Before Year-End
Once you close out your books for the season, you may find that your actual summer profit was higher or lower than what you projected back in September, highlighting the importance of accurate Small Business Accounting. Late vendor invoices, payroll adjustments, fall project income, and year-end equipment purchases can all shift your taxable income.
Use your updated year-to-date numbers to see whether you need to adjust your January payment. S Corporations and partnerships should also review owner wages and distributions, since these can affect both federal and Massachusetts estimates. This final check helps you avoid underpayment penalties and prepares you for the last estimated tax payment due in January.
5. Catch Up On Payroll And Contractor Compliance
Payroll is a common area for errors, especially in seasonal communities like Cape Cod, where staffing levels change throughout the year. Confirm that payroll records match your books and that all wages and tips have been accurately captured, ensuring proper Small Business Accounting practices.
If you work with independent contractors, confirm that W9 forms are on file. Anyone who paid six hundred dollars or more will require a Form 1099 in January.
Restaurants should double-check tip reporting and hours worked by seasonal employees. Service businesses should verify contractor payments before year’s end.
6. Double Check Sales Tax And Meals Tax Filings
If your business collects sales tax or meals tax, review your filings to make sure everything is up to date. Massachusetts penalties can add up quickly if a return is missed.
Restaurants should check monthly meals tax submissions. Retailers should review sales tax filings for accuracy, especially during the holiday season. If you discover a mistake, you can usually correct it by filing through MassTaxConnect, an important part of thorough Small Business Accounting.
7. Review Outstanding Invoices And Accounts Payable
Take time to clean up accounts receivable and accounts payable. Send reminders for overdue invoices and follow up on unpaid balances. If you have unbilled work, invoice it before the year ends.
For retail and restaurant owners, review vendor bills and ensure that all inventory and supply purchases have been recorded. Clearing these items gives you a clearer picture of your cash flow heading into winter.
8. Evaluate Equipment, Repairs, And Fixed Assets
Identify equipment upgrades, repairs, or replacements made this year so your CPA can decide whether they qualify for depreciation or immediate expensing.
On the Cape, coastal weather can be tough on buildings and equipment. Fall storms, salt air, and humidity often require more frequent repairs than inland businesses. Gather receipts for any storm-related work or maintenance to ensure they are recorded properly, supporting accurate Small Business Accounting.
9. Make A Simple Cash Flow Plan For Q1
January through March can be slow for many Cape businesses, so it helps to map out expected cash inflow and outflow. Review upcoming bills like rent, insurance, utilities, and loan payments. Set aside part of your year-end revenue to cover quieter months if you can.
If you expect a slow winter, consider planning maintenance, cleaning, equipment tune-ups, or time off during those months. A small cash buffer can help you avoid taking on debt or delaying important expenses.
Meet With Your CPA And Start The New Year Confident
A Q4 review with your CPA can help you identify tax-saving opportunities and make sure you have everything you need before the year closes. Your CPA can help you check for missing deductions and review your estimated taxes, so you’ll avoid surprises come April.
At Steven M. Ellard CPA, we help small business owners across Cape Cod stay on top of their numbers and plan with confidence. If you would like help reviewing your records or preparing for year-end, we are here to support you.
Book a call with our team today and start the new year on solid footing.