The end of the year has come and gone. Resolutions are in full swing (and a few may already be slipping). Now it’s time to close the books, balance budgets, and make sure your financials are clean and documented, because Santa Claus isn’t the only one who needs a list and a trusted accounting professional to double-check it.
Year-end is important for all businesses, but especially those in the nonprofit sector. Clean financials help you retain donor trust, keep your nonprofit in compliance, and make planning easier in the new year.
At JFW Accounting Services, we understand that year-end accounting can be a daunting and complex task. We love to help our clients make the end of the year a seamless transition into new financial goals. It all starts with our annual year-end checklist!
Join us, and let’s make 2026 your year to fiscally shine!
What Should You Have Done Before Year-End?
Before we even jump into the depths of our checklist, let’s review some of the things you must have completed every year like clockwork. Remember, tax season is just around the corner, and you want to be ready if an audit hits your doorstep. Make sure you wrap up your year-end closing within 60 days of the new year so you are audit- and tax-season-ready
Let’s get into the actual checklist!
Review All of Your Accounts
Before you call it a year, double-check that all of your accounts are reconciled.
- Banks and Credit Cards: Review your bank and credit card statements. Examine them against your accounting records and ensure you aren’t ending the year with discrepancies.
- Donation, Pledges, Grants: Review your donor commitments. Have all pledge receivables come into your organization? Finally, review your fund classifications to confirm how they match up against restricted and unrestricted qualifications.
- Petty Cash: Yes, the cash you have on hand also counts. Reconcile any physical cash you used throughout the year. This is just a smart move to make that helps you avoid fraud, theft, and accounting errors that could snowball into larger problems in the new year.
Verify Income and Expenses
Knowing where all of your money went over the year is critical to ending the year right for compliance and reporting. Take some time to review your program, management, and fundraising expenses.
Review all of your income and expense accounts and confirm they match reporting needs for audits and your upcoming Form 990.
Update Your Donor Records and Acknowledgements
Have all of your donor gifts been processed? Before the year’s end, confirm all donations are logged. This helps keep you updated and safe during tax season, helps assess your campaign success, charts future strategy, and is just excellent financial record-keeping.
Confirming donations of $250 or more is required by the IRS. So it’s essential to review all donor records and prepare IRS-compliant acknowledgement letters.
Restricted Funds and Grant Requirements
To retain donor trust and remain compliant, you must review how you’ve managed restricted funds. Ensure you’ve accurately tracked them and aligned spending with donor intent. This is a great way to build up your reputation with the public and secure future funding. Speaking of future funding, let’s look at what you need to cover with your grants at year-end.
Grants are essential to any nonprofit. Ensure you double-check your upcoming grant deadlines and complete the required documentation before the reporting dates.
Prepare Payroll and Employee Records
Take a moment to review all staff compensation and payments made throughout the year.
Account for the following when reviewing your records:
- Salaries
- Contractor payments
- Bonuses
- PTO payouts
Once you’ve accounted for everything, it’s time to prepare the forms that keep everyone compliant. Employees need their W-2s. Contractors need 1099s. Getting these tasks done early keeps you stress-free and prevents a January scramble none of us wants to relive.
Review Your Fixed Assets and Inventory
Next up: your assets. Not the metaphorical kind, the literal ones.
If your nonprofit purchased equipment, furniture, technology, or vehicles this year, make sure all of those updates are reflected in your depreciation schedule. Record any disposals too. This keeps your balance sheet accurate and makes life much easier when it’s time to produce audited financials.
Get Ready for Your Annual Audit or Financial Review
Whether you face a full audit, a financial review, or an internal check-up, preparation now saves a world of stress later. Start gathering all supporting documentation your auditor may request.
This includes the following:
- Bank statements
- Board minutes
- Grant agreements
- Payroll records
- Receipts
- Vendor invoices
Look for unusual transactions, compare trends year over year, and spot anything that may need an explanation. Auditors love clarity.
Pull Together Your Year-End Financial Statements
Now comes the moment where everything ties together. Your Statement of Financial Position, Statement of Activities, and Statement of Cash Flows tell the true financial story of your year.
These documents help your board make informed decisions, give donors confidence, and ensure your Form 990 is accurate. Take the time to prepare them thoughtfully. A clear set of statements is the foundation of strong nonprofit financial management.
Get Ready for Form 990
You don’t want to wait until spring to worry about your Form 990. It’s not a standard form, and different nonprofits file different versions (990-N, 990-EZ, or the full 990), and each requires specific information.
Start gathering what you need now:
- Revenue and expense totals
- Program service accomplishments
- Governance details
- Board member information
- Compensation reporting
The Form 990 is public record, so it’s more than a tax filing. It’s a window into your nonprofit’s integrity. Preparing ahead helps you put your best foot forward.
Make Your Year-End Compliant With JFW Accounting Services
And that’s your year-end accounting checklist — not exactly holiday magic, but definitely the kind of preparation that makes your nonprofit shine bright going into the new year.
Year-end doesn’t have to feel overwhelming. With the right process — and the right accounting partner — closing your books becomes less of a chore and more of a launchpad. At JFW Accounting Services, we’re here to help you wrap up 2025 with confidence and step into 2026 ready for fresh goals, smart planning, and financial clarity.
Let’s make the upcoming year your strongest yet – contact us today!
