Year-End Close 2025: The Human-Reviewed Automation Playbook

(A practical year end bookkeeping checklist 2025 for SMBs + nonprofits)

If your bookkeeping stack has any automation turned on, bank rules, auto-categorization, receipt capture, recurring entries, AI suggestions, and app integrations, year-end close in 2025 needs one extra step:

Audit your automation before you close.

Because automation doesn’t just save clicks. It also scales mistakes. A small misclassification or duplicate integration in March can quietly become twelve months of messy reporting by December. And the worst part? Your books can look “fine” until your CPA, board, or lender starts asking questions.

This human-reviewed playbook is designed for small businesses and nonprofits who want to finish 2025 with clean, reliable financials, without ripping out automation or spending all of January in panic mode.

Close calendar: What to do in November, December, and January

Year-end close goes faster when you spread the work across three checkpoints.

November: Clean up the foundation

November is when you get ahead of year-end issues that always take longer than expected.

Do this in November:

• Confirm every financial account is connected and importing correctly (banks, credit cards, loans, PayPal/Stripe, merchant services)
  
• Reconcile everything through October 31
  
• Review and reduce any “Uncategorized,” “Ask My Accountant,” or “Misc” balances
  
• Start collecting W-9s from contractors/vendors you expect may cross 1099 thresholds
  
• Confirm your reporting structure still fits how you run the organization:
  
  • SMBs: departments, locations, job costing (if applicable)
    
  • Nonprofits: programs/classes/grants and restricted/unrestricted needs
    

Automation watch-out: if rules or AI are coding transactions without requiring a job/class/program selection, you can lose reporting accuracy fast.

December: Reconcile, validate, and lock down

December is not the time to “catch up” on the whole year. It’s the time to ensure your books are strong heading into year-end.

Do this in December:

• Reconcile everything through November 30 early in the month
  
• Check clearing accounts (undeposited funds, payroll clearing, merchant clearing) and clear anything stale
  
• Identify “year-end decision” transactions:
  
  • large equipment purchases
    
  • insurance premiums spanning periods
    
  • deposits that may be deferred revenue
    
  • owner draws/distributions that need clean classification
    
• Run preliminary year-end reports so surprises don’t show up in January
  

January: Final tie-outs and year-end packet

January is where you finalize, not where you discover the problem.

Do this in January:

• Reconcile all December statements
  
• Run your automation/rules audit one last time (details below)
  
• Finalize 1099 preparation
  
• Build your year-end deliverables packet for your CPA/board
  

A good goal: your CPA should receive a clean packet by January 31 (or earlier if possible).

Reconciliations with automation in the loop

(Bank, credit cards, loans, clearing accounts)

In 2025, reconciliations can be deceptively “easy” because bank feeds and automation do a lot of the posting. But year-end success isn’t just “the reconciliation is done.” It’s that the reconciliation tells the truth.

Bank and credit card reconciliations: what to verify

When you reconcile, also verify:

• No duplicate transactions from overlapping apps/integrations
  
• Transfers are booked as transfers (not income/expense)
  
• Large receipts are split properly (especially big-box and online retail)
  
• Vendor names are consistent (important for reporting and 1099 prep)
  

Human-reviewed reconciliation checklist:

• Confirm you’re reconciling to the statement ending balance (not the bank feed balance)
  
• Review uncleared transactions older than 60 days
  
• Look for patterns of reconciliation adjustments or “plug” entries
  
• Run a report for:
  
  • Uncategorized
    
  • Ask My Accountant
    
  • Clearing accounts and get them under control
    

Loans and leases: the year-end trap

Automation frequently mishandles loans because loan payments require structure:

• Principal reduces the loan liability
  
• Interest hits interest expense
  

If your system is expensing the full payment, your profit is wrong and your balance sheet is wrong.

Year-end loan check:

• Compare your loan balance in the books to the lender statement at year-end
  
• Validate that interest expense looks reasonable relative to the loan terms
  
• Confirm payments are not being duplicated (some apps bring in transactions twice)
  

Clearing accounts: the quiet snowball

Clearing accounts are necessary, but they shouldn’t become storage bins.

Common clearing accounts:

• Undeposited funds
  
• Merchant clearing (Stripe/Square/PayPal)
  
• Payroll clearing
  
• “Suspense” or “clearing”
  

Year-end rule: clearing accounts should be near zero and supported by current activity.
If they’ve been creeping up, year-end is the time to investigate.

1099 prep the right way

(W-9s, thresholds, contractor mapping)

If you leave 1099s until late January, you’ll end up scrambling for W-9s, fixing vendor records, and trying to reconstruct what happened.

The fix is simple: treat 1099 prep like a process, not a form.

Step 1: Collect W-9s early

In November/December, request W-9s from:

• contractors
  
• freelance providers
  
• certain service vendors (as appropriate)
  

Store them securely and consistently, because they contain sensitive info.

Step 2: Make sure contractor payments are tied to vendor records

Automation often posts transactions without clean vendor mapping, especially when payments run through bill pay systems, ACH tools, or expense apps.

What to check:

• Do contractor payments show under the correct vendor profile?
  
• Are there multiple vendor profiles for the same contractor?
  
• Are payments coded to a generic “contract labor” account without vendor detail?
  

Step 3: Run a contractor spend report and verify reality

Generate a report of contractor/vendor totals and compare it to:

• your payment methods
  
• your records of who should receive 1099s
  
• your CPA’s guidance on your scenario
  

Automation watch-out: broad bank rules that code contractor payments as “supplies” or “repairs” can bury 1099 activity.

Fixed assets and threshold checks

(Catch the “big-box equipment” problem)

A very common year-end issue: equipment gets purchased at big-box stores or online retailers and gets auto-coded as supplies.

Examples:

• tools, equipment, machinery attachments
  
• computers and office equipment
  
• durable items that should be evaluated as fixed assets
  

What to do

Run a vendor spend report for:

• Amazon / big-box retailers
  
• equipment suppliers
  
• specialty tool vendors
  

Then filter for higher-dollar transactions and identify anything that should be reviewed under your capitalization policy (your CPA can confirm your threshold and approach).

Why it matters: misclassified assets distort:

• net income
  
• tax planning
  
• balance sheet strength
  
• reporting consistency year-over-year
  

Nonprofit tie-outs

(Programs, classes, grants, restricted/unrestricted reporting)

For nonprofits, year-end close isn’t just about accuracy. It’s about credibility.

Your board and funders need financials that tie out to how you operate:

• program vs admin
  
• grant restrictions
  
• class/program reporting
  

Nonprofit year-end checklist

• Validate income is coded to the correct fund/grant/program
  
• Confirm expenses are consistently coded (and not drifting into generic buckets)
  
• Review restricted vs unrestricted classification
  
• Tie internal grant tracking (if used) to the accounting reports
  
• Make sure you can generate “board-ready” reporting without a manual spreadsheet rescue
  

Automation watch-out: if bank rules are coding transactions without program/class/grant tags, your year-end reporting will require heavy reclassing, often under pressure.

AI/rules review

(Turn risky rules off; keep narrow ones; test before trusting)

This is the core of a 2025 year-end close: rules audit.

Automation should be:

• narrow
  
• testable
  
• reversible
  
• reviewed regularly
  

High-risk rules to tighten or disable

• Rules that apply to multiple vendors or broad keywords
  (“If description contains ‘Store’ → Supplies”)
• Rules that auto-add transactions without review
  
• Rules that split transactions without consistent logic
  
• Rules that post to COGS/program categories without requiring job/class/program selection
  
• Any rule affecting payroll, taxes, or loan activity without strict mapping
  

Safer rules to keep

• Single-vendor recurring expenses with consistent purpose (software subscriptions, rent, insurance)
  
• Rules that also enforce reporting structure (job/class/program) where possible
  
• Rules you’ve tested and spot-checked
  

The rules audit process (simple and effective)

1. Pull a list of all bank rules/automation settings
   
2. Flag any rule that is broad or touches high-stakes categories
   
3. Test rules on a small batch of transactions
   
4. Narrow the rule (or turn it off)
   
5. Document what changed and why
   

The principle: AI can suggest. Rules can automate. But a human should decide what your books mean.

Deliverables: year-end packet checklist for your CPA or board

A clean year-end packet saves time, reduces CPA back-and-forth, and lowers the chance of rushed, expensive corrections.

SMB year-end packet checklist

• Profit & Loss (full year + monthly comparison)
  
• Balance Sheet
  
• General Ledger (or accountant access)
  
• Reconciliation reports for bank/credit cards (December)
  
• Accounts Receivable aging + Accounts Payable aging (if applicable)
  
• Loan statements and year-end balances
  
• Fixed asset list (items flagged for review)
  
• Contractor/vendor totals for 1099 preparation + W-9 storage location
  

Nonprofit year-end packet checklist (additions)

• P&L by program/class/grant
  
• Restricted/unrestricted support schedule (as applicable)
  
• Grant tie-out summaries (income and expense)
  
• Board-ready financial overview with key notes
  

Year end bookkeeping checklist 2025

(Quick summary you can copy into your project manager)

• Reconcile all bank accounts through 12/31
  
• Reconcile all credit cards through 12/31
  
• Validate transfers and remove duplicates from integrations
  
• Confirm loan principal/interest splits + year-end balances
  
• Clear or explain clearing accounts (undeposited, merchant, payroll clearing)
  
• Reduce Uncategorized / Ask My Accountant / Misc to near zero
  
• Run vendor spend report for big-box equipment; flag fixed assets for CPA review
  
• Start 1099 prep: W-9s + vendor mapping + contractor totals report
  
• Nonprofits: program/class/grant tie-outs + restricted/unrestricted validation
  
• Run an automation/rules audit: disable broad rules; tighten narrow ones; test changes
  
• Assemble CPA/board year-end packet

If you want year-end close to be calm, the best strategy is consistent month-end discipline, supported by automation, and protected by human review.

• Explore ongoing support: Monthly Bookkeeping
• Learn what to review each month: Crucial Financial Reports