Closing your books at year-end is more work in California than it is in most other states. On top of the standard federal tasks (reconciling accounts, pulling financial statements, gathering 1099 data), California adds its own layer: Franchise Tax Board (FTB) estimated tax payments, the LLC annual fee (separate from the $800 franchise tax), CalSavers retirement plan compliance, Statement of Information deadlines, and the pass-through entity tax (PTET) election if it applies to your business. If you try to manage all of it from memory in December, something gets missed.
This checklist organizes every year-end task in the sequence a bookkeeper would work through it, with the California-specific items called out explicitly. Use it as a working document: check items off as they are done, flag what needs professional help, and give the completed version to your tax preparer so they know what is ready.
Year-End Bookkeeping Checklist for California Small Businesses
The items below are numbered in the order most bookkeepers work through them. Work forward through the list from your last clean reconciliation date.
- Complete all outstanding bank reconciliations. Every bank account and credit card account should be reconciled through November 30 (and eventually through December 31) before you close the year. A reconciliation is complete when the balance in your bookkeeping software matches the ending balance on your bank statement with all differences explained. Do not skip months and try to catch up in January; discrepancies compound. If your accounts are significantly behind, our catch-up bookkeeping service handles this process.
- Reconcile all credit card accounts. Each business credit card is its own reconciliation. If you use a card for both business and personal purchases, note that only business purchases are deductible and you will need to identify personal charges as owner draws or distributions, not expenses.
- Pull your accounts receivable aging report. Identify any customer invoices unpaid past 90 days. If you are a cash-basis taxpayer, uncollected invoices are not income until received; if you are accrual-basis, they are income in the year billed. Determine whether any long-outstanding balances are genuinely uncollectible. A bad debt deduction requires documentation of collection efforts.
- Review accounts payable. Confirm that all bills received in 2026 that you owe are recorded in your books, even if not yet paid. For accrual-basis taxpayers, expenses are recorded when incurred, not when paid. Cash-basis taxpayers record expenses when paid, but confirming all December payments are entered before year-end close is essential.
- Review your fixed asset and depreciation schedule. List all equipment, vehicles, and property purchased or disposed of during 2026. New assets acquired during the year must be added to the depreciation schedule. Assets sold or scrapped must be removed and any gain or loss calculated. Your tax preparer will need this information to determine whether Section 179 expensing or bonus depreciation applies for the year.
- Build your 1099-NEC vendor list. For 2026, the federal 1099-NEC reporting threshold is $2,000 per vendor per calendar year (raised from $600 by the One Big Beautiful Bill Act). Pull a report from your bookkeeping software listing all vendor payments for the year. Filter for unincorporated vendors (sole proprietors, single-member LLCs not taxed as a corporation, partnerships) paid $2,000 or more. Confirm you have a signed W-9 on file for each. 1099-NEC forms are due to recipients and to the IRS by January 31, 2027.
- Conduct a W-2 vs. 1099 worker classification review. California's AB5 law makes worker classification an active compliance issue. Before year-end, review every person you paid in 2026 who is on a 1099 rather than a W-2. Apply the ABC test: (A) free from control, (B) outside the usual course of your business, (C) customarily engaged in an independently established trade. Workers who do not clearly satisfy all three prongs may be misclassified. If you have doubts about any classification, flag them for review before filing 1099s and W-2s. Construction businesses face additional complexity under AB5 and should consult a California employment attorney or a bookkeeper familiar with the current state of the law. See our W-2 vs 1099 California bookkeeping guide for the full breakdown of records required under each classification.
- Complete inventory count (if applicable). If your business carries inventory, a physical count as of December 31 is required to calculate your cost of goods sold accurately. The count must reconcile with your bookkeeping system's inventory balance. Discrepancies require adjustment before year-end close.
- Confirm and pay your FTB Q4 estimated tax payment. California calendar-year taxpayers who are required to make estimated tax payments owe their fourth-quarter installment to the Franchise Tax Board by January 15, 2027. This payment applies to individuals, sole proprietors, partners, and S corporation shareholders who have FTB estimated tax liability. Underpaying can result in an underpayment penalty. Your Q4 payment should be based on your actual year-to-date income (now knowable from your reconciled books) rather than the safe harbor estimate you may have been using through Q3.
- Confirm payment of the California LLC estimated annual fee (Form 3536). California LLCs with total income of $250,000 or more in 2026 owe an estimated annual fee in addition to the $800 franchise tax. This estimated annual fee (reported on Form 3536) was due June 15, 2026 for calendar-year LLCs. If your LLC's income crossed the $250,000 threshold during 2026 and you did not pay Form 3536, address this with your tax preparer immediately; the FTB will assess it at filing. The $800 minimum franchise tax (Form 3522) is a separate obligation due April 15, 2027 for calendar-year LLCs.
- Check CalSavers compliance. California's CalSavers program requires any employer with at least one employee to either offer a qualified employer-sponsored retirement plan (401(k), SIMPLE IRA, SEP-IRA, or similar) or register employees in the state-run CalSavers program. Year-end is a natural time to confirm that all eligible employees are either enrolled in CalSavers or covered by a qualifying plan. Noncompliance carries escalating financial penalties. Confirm current enrollment thresholds at CalSavers.ca.gov.
- Confirm your Statement of Information filing. California corporations must file a Statement of Information with the Secretary of State annually. California LLCs must file biennially (every two years). Check your entity's filing history on the California Secretary of State's website (bizfileonline.sos.ca.gov) to confirm you are current. A delinquent Statement of Information can trigger a $250 penalty and, in some cases, suspension of the entity.
- Review your pass-through entity tax (PTET) election and payment. California's optional PTET allows S corporations and partnerships to pay state income tax at the entity level, which may generate a federal deduction that reduces the owners' personal income tax. If your entity elected PTET for 2026, confirm the required prepayment (due June 15, 2026) was made and that the year-end balance will be paid by the filing deadline. If you have not yet evaluated whether PTET makes sense for your entity, discuss it with your tax preparer before the Q4 estimated payment deadline.
- Pull your year-end financial statements. Once all of the above is complete, generate: (a) a Profit and Loss Statement for the full calendar year (January 1 through December 31, 2026), (b) a Balance Sheet as of December 31, 2026, and (c) a Statement of Cash Flows if your lender or business partner requires it. These three documents are what your tax preparer needs to file your return. They are also what a lender, a bonding company, or a business buyer will ask for if any of those events arise in 2027.
- Reconcile CDTFA and FTB figures. If your business files California sales tax returns with CDTFA, pull your total gross sales as reported across all CDTFA returns for 2026 and compare it to the total revenue in your Profit and Loss Statement. These figures will not match exactly (CDTFA reports include tax-exempt sales and may differ in timing), but a large unexplained discrepancy is a flag. California's FTB and CDTFA can cross-reference filings. A business whose CDTFA taxable sales are materially higher than the revenue on its FTB return is a discrepancy both agencies may notice. Reconciling these figures before filing helps protect you. See our California sales tax bookkeeping guide for detail on CDTFA setup and audit triggers.
California Deadline Summary Table
| Deadline | Form or Payment | Who It Applies To |
|---|---|---|
| January 15, 2027 | FTB Q4 estimated tax (540-ES or 100-ES) | Individual sole proprietors, partners, S corp shareholders with FTB estimated tax liability |
| January 31, 2027 | 1099-NEC to recipients and IRS | Any business that paid an unincorporated vendor $2,000 or more in 2026 |
| January 31, 2027 | W-2 to employees and Social Security Administration | Any business with employees in 2026 |
| March 15, 2027 | S corporation and partnership California tax return (Form 100S or 565) | S corps and partnerships; extended deadline available |
| April 15, 2027 | Individual and C corporation California tax return (540 or 100) | Individuals, sole proprietors, C corps; extended deadline available |
| April 15, 2027 | California LLC annual franchise tax (Form 3522, $800) | All active California LLCs regardless of income |
| June 15, 2027 | California LLC estimated annual fee (Form 3536) | LLCs with projected total income above $250,000 in the coming tax year |
| Annually (varies by entity anniversary) | Statement of Information | California corporations (annually) and LLCs (biennially) |
Note: These dates reflect the standard 2026 tax year schedule for calendar-year filers. Extension filings change these dates; confirm with your tax preparer. The 2027 dates apply to 2026 tax year obligations.
Frequently Asked Questions
What should be on a year-end bookkeeping checklist?
At minimum: complete bank and credit card reconciliations through December 31, accounts receivable and payable review, fixed asset and depreciation schedule update, 1099-NEC vendor list, W-2 preparation for employees, inventory count if applicable, and a final set of financial statements (Profit and Loss, Balance Sheet). For California businesses, add: FTB Q4 estimated tax payment, LLC estimated annual fee check, CalSavers compliance review, Statement of Information check, and CDTFA-to-FTB reconciliation.
When should I close my books for the year?
Ideally, your books through November are fully reconciled before December starts, so you are only reconciling December transactions during the first two weeks of January. Most small businesses realistically close their year-end books by mid-January, which gives them time to gather any late-arriving December statements and still get the package to their tax preparer before the March or April deadline. If your books are not closed by February 15, your tax return is almost certainly going on extension.
What is the LLC annual fee due date in California?
California LLCs owe two separate payments: the $800 minimum annual franchise tax (Form 3522) is due April 15 for calendar-year LLCs; the estimated annual fee (Form 3536) for LLCs with total income above $250,000 is due June 15. These are separate obligations. Many LLC owners know about the $800 minimum but are not aware of Form 3536 until the FTB assesses it at filing time.
What is the 1099-NEC threshold for 2026?
For the 2026 tax year, the federal 1099-NEC reporting threshold is $2,000 per unincorporated vendor per calendar year. This is an increase from the prior $600 threshold, enacted under the One Big Beautiful Bill Act. If you paid any contractor, subcontractor, or freelancer $2,000 or more in 2026 and they are not a corporation, you need to file a 1099-NEC by January 31, 2027.
Related Guides
- California vs. federal taxes in 2026: QBI non-conformity, SB 711, and bonus depreciation for SE LA businesses
- California sales tax bookkeeping
- Bookkeeping cost guide
- Mid-year bookkeeping review for California small businesses
Year-End Bookkeeping Services in Downey and Southeast LA
Year-end close is the busiest and most consequential bookkeeping period of the year. If your books are not current, if you are missing W-9s, or if you are uncertain whether your FTB estimated payments are correct, the time to address it is before December 31, not after.
J.P Bookkeeping handles year-end close for small businesses and contractors throughout Downey, Paramount, Lynwood, Compton, Bellflower, and Norwalk. Jimmy is a QuickBooks Advanced ProAdvisor and serves clients in English and Spanish.
Book your year-end review consultation now at jpbookkeepingbusiness.as.me/jpbookkeeping. If you are considering professional bookkeeping for the first time, our bookkeeping cost guide will help you understand what to budget. If you have CDTFA sales tax obligations and are not confident your books are set up correctly, see our California sales tax bookkeeping guide. For a mid-year version of this checklist covering EDD, CDTFA, and the July 31 deadlines, see the mid-year bookkeeping review for California small businesses.
Disclaimer: J.P Bookkeeping is a bookkeeping firm, not a CPA or law firm. For tax planning, legal questions, or regulatory compliance, consult a licensed CPA or attorney. Information reflects publicly available requirements as of June 8, 2026. Confirm current IRS rates and thresholds at irs.gov and ftb.ca.gov before filing.