Your December 31 Deadline Is Closer Than You Think

09 Nov Your December 31 Deadline Is Closer Than You Think

By November, most of your financial year has already happened.

That changes the job.

October is a good time to look ahead and ask whether there are still tax decisions worth making. November is when you need to make sure the year you actually had is being captured correctly before December 31 arrives.

Because some year-end problems are not really tax problems.

They are missing documentation. An owner expense sitting in the wrong account. A charitable gift that was planned but never completed. A reimbursement nobody submitted. A vendor file missing the information needed for January reporting.

None of those things sounds particularly urgent in November.

They become much more annoying in January.

Here is what is worth cleaning up while the year is still open.

For Individuals: Finish What You Already Started

Year-end planning does not have to mean finding another financial move to make.

Sometimes the most useful thing you can do is finish the ones already in motion.

Check the transactions that have a real year-end deadline

Some financial transactions can happen after December 31 and still affect the tax return for the prior year. Others cannot.

That distinction is worth knowing now.

If you are planning a charitable contribution, taking a required retirement distribution, exercising stock options, selling an investment, or completing another transaction intended for this tax year, confirm the deadline that applies to that specific transaction.

Do not assume that because tax returns are filed next year, the transaction can happen next year too.

If you have a required minimum distribution, verify that it actually happened

For people subject to required minimum distribution rules, this is one item that deserves an actual check, not an assumption.

If distributions are automated, verify the amount and confirm that the distribution was processed. If you have multiple retirement accounts, inherited accounts, or changed financial institutions during the year, make sure nothing was missed in the shuffle.

This is particularly important if this is your first year taking required distributions.

Finish charitable gifts you already intended to make

November is not a reason to give money away solely for a tax deduction.

But if charitable giving was already part of your plan, make sure the execution matches the intention.

That may be as simple as completing a cash donation and retaining the receipt. For appreciated securities, donor-advised funds, qualified charitable distributions, or other non-cash gifts, more lead time may be necessary.

December 31 is a terrible day to discover that a transaction takes several business days to process.

Find the paperwork from the unusual parts of your year

Most people can remember their regular paycheck.

It is the unusual transactions that tend to disappear from memory by tax season.

If you sold a home, received an inheritance, exercised stock options, started consulting, made a large charitable gift, rolled over a retirement account, received a distribution, or moved between states, gather the related records now.

You do not need to organize your entire tax return in November.

You are simply making sure that when tax season arrives, the unusual thing that happened in March has not become a scavenger hunt.

Check flexible spending accounts and other benefits

If you participate in an employer benefit that has a year-end spending, reimbursement, or submission requirement, check the rules now.

Some plans allow funds to carry over. Some provide a grace period. Others operate differently.

The important part is not to assume.

Look at what is left, what expenses are eligible, and what your particular plan requires before the year closes.

For Business Owners: Clean Up the Financial Story of the Year

For a business owner, November is less about finding another deduction and more about making sure the books tell the truth.

That matters for taxes, but it also matters for management.

You should be able to enter December knowing what the business earned, what it owes, what customers owe it, what belongs to the owner, and what still needs to be corrected.

Clear out the “I’ll fix it later” transactions

Every set of books seems to collect a few.

The transfer you cannot quite remember. The personal purchase made on the company card. The owner contribution recorded as income. The payment sitting in uncategorized transactions. The expense someone reimbursed themselves for without attaching the receipt.

One transaction may not matter much.

Fifty of them do.

Review uncategorized transactions, suspense accounts, owner draws and contributions, shareholder or partner loans, and unusual transfers while someone still remembers what they were.

A clean year-end close starts here.

Get employee and contractor information in order before January

January reporting becomes much easier when November is used for cleanup.

Review your employee and contractor records. Make sure names, addresses, taxpayer information, and payment records are complete and current.

If you paid a new contractor during the year but never collected the appropriate tax information, now is the time to fix that.

Waiting until you are trying to prepare year-end information returns turns a small administrative task into a deadline problem.

Review reimbursements that are still sitting out there

Did you or an employee pay a legitimate business expense personally and never submit it for reimbursement?

Mileage is a common example. So are travel, supplies, subscriptions, and small purchases made on a personal card.

Get those records submitted and categorized properly.

The point is not simply to capture another expense. It is to keep business expenses in the business records and personal activity out of them.

That separation matters.

Look for year-end payroll items that are not part of a normal paycheck

The final payroll of the year can involve more than wages.

Depending on the business and benefits provided, there may be taxable fringe benefits, owner health insurance, personal use of a company vehicle, bonuses, retirement-related items, or other compensation that needs to be reflected correctly.

These are much easier to address before payroll closes for the year than after W-2 preparation has begun.

Ask your payroll provider or CPA what information they need from you and when they need it.

Review what the business owns

Take a look at the fixed asset list.

Does the business still own everything on it?

Equipment gets sold. Computers get replaced. Furniture gets discarded. Vehicles get traded. Assets sometimes remain on the accounting records years after they have left the building.

Conversely, a significant purchase made during the year may never have been recorded as an asset at all.

Your year-end records should reflect what the business actually owns, not what it owned three years ago.

Look at old receivables with fresh eyes

An accounts receivable report can make a business look healthier than it really is.

If a customer has owed you $18,000 for nine months and nobody realistically expects to collect it, that deserves attention.

That does not mean every overdue invoice should simply be written off. Tax treatment depends on the circumstances and accounting method.

But management should know the difference between money customers owe and money the business realistically expects to receive.

Review the aging report before year-end and decide which accounts need collection activity, follow-up, adjustment, or a conversation with your accountant.

Make sure loans actually agree with reality

If the business has loans, lines of credit, equipment financing, shareholder loans, or partner loans, compare the books with the year-end statements from the lender.

Loan payments include more than one component, and balances can drift when transactions are recorded incorrectly.

The same goes for money owners have loaned to or borrowed from the business.

If the accounting records say the company owes you $60,000, you should be able to explain why.

Ask one question about your balance sheet

Business owners tend to spend most of their time looking at the profit and loss statement.

Before year-end, spend some time with the balance sheet.

Look at cash. Receivables. Credit cards. Loans. Payroll liabilities. Sales tax payable. Owner equity. Fixed assets.

Then ask:

“Do I know what these numbers represent?”

You do not need to personally reconcile every account.

But if a balance looks strange, has not changed all year, or cannot be explained, November gives you time to investigate it before those numbers become the starting point for the tax return.

December 31 Is Not the Deadline for Everything

This is worth saying because year-end advice often makes December 31 sound like a cliff.

It isn’t.

Some contributions, elections, filings, reconciliations, and tax-related actions can happen after the calendar year closes. Others cannot. The deadline can also depend on the type of account, transaction, entity, or tax rule involved.

That is why the useful exercise is not trying to get everything done by December 31.

It is identifying the things that cannot be fixed the same way once December 31 has passed.

Those deserve your attention first.

Before You Add Another Strategy, Close the Gaps

There is a tendency at year-end to go looking for one more tax strategy.

Sometimes there is one worth considering.

But there is also value in simply closing the year well.

Make sure the transaction happened. Get the documentation. Clean up the books. Confirm the distribution. Submit the reimbursement. Fix the payroll item. Find out what that strange balance actually represents.

Then you can make planning decisions from numbers you trust.

If any of this sounds like your year, the fifteen minutes it takes to check are cheaper than the hours it takes to reconstruct in March. That’s worth a conversation with your CPA while the year is still open.