YEAR-END — THE CLOSE

YEAR-END ACCOUNTING WITHOUT THE JANUARY PANIC.

QUICK ANSWER

Year-end at most subcontractors is archaeology: the CPA digs through twelve months of half-coded transactions in February while the owner answers questions about checks nobody remembers writing. The version that works runs as a checklist with deadlines: Q4 prep in October and November (reconciliations current, aged AR attacked, fixed assets and loans scheduled), a real December close (every account reconciled, every job's costs cut off clean), the construction-specific truing (WIP and percent complete on every open job, unbilled COs resolved, retainage confirmed), and a CPA handoff package in January that cuts their prep time and your bill. Run the list and tax season becomes the most boring month of the year.

YEAR-END ISN'T AN EVENT. IT'S A CHECKLIST WITH DEADLINES — AND MOST OF IT IS DUE BEFORE DECEMBER.

BY JOSH LUEBKER Published: June 2026 Updated: June 2026

PHASE ONE — OCT/NOV

THE Q4 PREP CHECKLIST.

The January panic is built in October. Everything on this list is easier with sixty days of runway:

Bank, credit card, and loan accounts reconciled current — no statement more than 30 days behind

Aged AR worked hard in Q4 — every dollar collected by December 31 is a dollar your balance sheet shows the bank and surety

Unbilled work and unsubmitted change orders pushed through billing now — revenue earned this year should be billed this year

Fixed asset schedule updated: purchases, disposals, trades — with invoices attached for everything your CPA will depreciate

Loan schedules current: balances, rates, maturities — including any equipment notes signed mid-year

Subcontractor and vendor W-9s collected for January 1099s — chasing them in January is the classic time sink

A December tax planning conversation with your CPA — equipment purchases, bonus depreciation, and entity decisions only work before the ball drops

PHASE TWO — THE DECEMBER CLOSE

THE CONSTRUCTION-SPECIFIC TRUING.

TRUE-UP 01 — THE WIP SCHEDULE

Every Open Job, Honest Percent Complete

The year-end WIP is the document of the season: every open job with contract value (original plus executed COs), cost to date, cost to complete, percent complete, earned revenue, billed to date, and over/under-billing. It drives your revenue recognition, your tax position on POC methods, and the financial statement your bank and surety judge you on for the next twelve months. An honest cost-to-complete on every job is the difference between a year-end that's true and one that's hopeful.

TRUE-UP 02 — COST CUTOFF

December Costs in December, Period

Year-end cutoff errors distort two years at once: a $40K material invoice dated January 3 for December deliveries understates this year's costs and overstates next year's. The discipline — accrue received-but-uninvoiced materials, land December labor including the accrued days of the split payroll week, and post the December subcontractor pay apps in December — keeps both years' job margins honest and survives any audit question about the period.

TRUE-UP 03 — RETAINAGE, COs, AND THE LOOSE ENDS

The Construction Receivables Nobody Reconciles

Retainage receivable confirmed job-by-job against contracts; unapproved change orders dispositioned — pursue, write down, or document the dispute; old job balances zeroed out; customer deposits and over-billings classified correctly as liabilities. These are the accounts generic year-end checklists skip and construction balance sheets live on.

PHASE THREE — JANUARY

THE CPA HANDOFF PACKAGE.

The package that cuts your CPA\u2019s prep time — and their bill — in half:

Closed trial balance with every account reconciled — bank, cards, loans, payroll liabilities

The year-end WIP schedule with POC support — the construction document that drives the return

Fixed asset and loan schedules with backup invoices

Job-level profit detail for the year — closed and open jobs

AR and AP agings as of December 31, retainage broken out separately

Owner transactions documented: draws, contributions, personal-use items, vehicle logs

1099s issued by January 31 — done, not pending

Hand a CPA this package the first week of February and the return gets filed from clean data instead of rebuilt from bank statements. Most SPM clients\u2019 CPAs notice the difference in the first year — and the fee reflects it.

BY TRADE

YEAR-END TRAPS, TRADE BY TRADE.

Civil & Equipment-Heavy

The fixed asset schedule is the trap: machines bought, sold, and traded all year with paperwork scattered across the desk and the dealer's email. Section 179 and bonus depreciation decisions on six-figure iron belong in the December tax conversation — they're worth more than every other line on the checklist combined.

Concrete & Labor-Heavy

Cutoff is the trap: the split payroll week at December 31 and the ready-mix invoices that arrive in January for December pours. Accrue both or your December job margins — and your year — are fiction in both directions.

Electrical & Multi-Phase

The CO pile is the trap: a year of small directed changes, some approved, some pending, some forgotten. Year-end is the forcing function — every CO dispositioned, every approved one in contract value, every pending one disclosed on the WIP your surety reads in March.

SWPPP & Multi-Site

The rollup is the trap: forty sites blended into one number hide which contracts made money — and which sites still hold unbilled emergency response and maintenance work from Q3 storms. Per-site truing at year-end is where that revenue gets found or lost forever.

WHAT CHANGES WHEN THIS IS FIXED

WHAT A CLEAN YEAR-END BUYS YOU.

By the 10th

The monthly close that makes year-end small. Subs that close every month by the 10th don't have a year-end project — they have a thirteenth close with a few extra schedules. The entire checklist above compresses to days because December starts reconciled. That's the real fix: year-end stops being painful when it stops being annual.

Lower

The CPA bill, when the handoff is clean. CPAs price construction returns partly on how much rebuilding the books need. A reconciled trial balance with a supportable WIP arrives as a tax engagement instead of a forensic one — most subs see the difference in the invoice, and all of them see it in how few questions February brings.

12 Months

Of bank and surety credibility, set in one document. The year-end financial statement is what your bank renews the line against and your surety sets program limits from. A clean close with an honest WIP is worth real borrowing and bonding capacity — a $25M GC went from unbondable to $10M aggregate on the strength of financials a surety could finally read.

Frequently Asked Questions

October — seriously. The two highest-value items on the entire checklist have hard December deadlines: collecting aged AR (every dollar in by December 31 strengthens the balance sheet your bank judges) and the tax planning conversation with your CPA (equipment purchases, bonus depreciation, and entity moves only count if executed before year-end). Starting in January forfeits both and converts everything else into archaeology. If it's already January as you read this: run the list anyway, then install a monthly close so next year's version takes a week.

Seven things, listed in the handoff section above — but the two that matter most for a subcontractor are a reconciled trial balance and a supportable WIP schedule. The WIP is the construction-specific document: it drives revenue recognition under percentage-of-completion, supports your tax method, and answers the questions your CPA would otherwise ask one email at a time through March. If you can only fix one thing this year, fix the WIP. It's also the document your bank and surety will read.

Yes — for two reasons. First, even cash-basis taxpayers need accrual-quality, POC-based financials for management, banking, and bonding; sureties don't underwrite cash-basis statements, and running the company on cash-basis numbers is how billing timing gets mistaken for profit. Second, the cash method has revenue limits and contract-type restrictions, and growing subs cross them — often without noticing until the CPA flags it. The clean structure: POC books for running and presenting the business, with your CPA making the tax-method adjustments at filing. You get truthful management numbers and the most favorable legal tax position, not one masquerading as the other.

Yes — triage version: reconcile every bank and loan account first (non-negotiable, everything else builds on it), build the WIP for open jobs even if historical job costing is rough, work the AR aging hard before December 31, and document fixed assets and loans. Skip perfecting twelve months of cost coding — your CPA can file from reconciled accounts plus a defensible WIP. Then fix the system in Q1: SPM's onboarding migrates books back to the start of the last taxable year, which means one cleanup covers the return and the fresh start. If your tax year ends within three months of starting, the migration runs through that year-end so January 1 begins clean.

For clients, year-end is built in: the books are closed monthly by the 10th all year, the WIP is reconciled every month, and the January handoff package goes to your CPA as a matter of routine — most clients spend under two hours total on year-end. For subs coming on board in Q4: the timing is actually ideal, because the onboarding migration and the year-end cleanup are the same work done once. SPM doesn't prepare the tax return — your CPA keeps that — but the return gets prepared from books that don't need rebuilding.