Year End Close for General Contracting

Start from the standard month-end checklist and add specific year-end tasks such as full balance sheet reconciliations, fixed asset review, inventory counts (if applicable), tax schedule preparation, and external CPA requests.

For each task, estimate how many days it typically takes based on prior experience. Factor in dependencies like needing final bank statements or WIP reports before certain tasks can start.

Lay out tasks across a calendar covering the last month of the fiscal year and the first month of the new year. Assign target dates for starting and completing each step, working backward from tax or lender deadlines.

For every line in the checklist, name a primary responsible person and a backup. Include AP, AR, payroll, project accounting, and leadership where needed.

Walk through the draft calendar with the finance leader and key managers to confirm feasibility. Adjust timing for holidays, vacations, and other constraints so the plan is realistic.

Share the final checklist and calendar with all impacted team members. Post it in a shared location and reference it regularly during year-end so people stay aligned.

Send a reminder to project teams and vendors stating the last day for submitting invoices and billing approvals that will be included in the current fiscal year. Emphasize that late items may be pushed into the new year.

Run an AP aging report and identify invoices that are very old, duplicated, disputed, or no longer valid. Work with project managers and vendors to decide whether these should be paid, adjusted, or written off.

For each stale payable, either obtain approval to pay, post a credit memo, or write off the balance according to company policy. Document reasons for any write-offs in your workpapers.

Run an AR aging report and list customer balances that are significantly past due or disputed. Also review unbilled revenue balances and confirm that they represent real earned amounts.

For difficult receivables, coordinate with project management and leadership to decide on further collection efforts or writing down balances. Record any agreed bad-debt provisions via journal entries.

On the day after your cutoff, stop back-dating AP and AR to the closing year except with specific finance approval. Use accrual entries for material items discovered after cutoff that truly belong in the prior year.

Export a list of all balance sheet accounts (assets, liabilities, and equity) as of year-end. Mark which ones already have monthly reconciliations and which need extra work at year-end.

For each account, create a schedule that breaks down the total into individual items (for example, by vendor, by job, by customer, or by document). Use spreadsheets or system reports to build these schedules.

For accounts like bank, loans, retention, and payroll liabilities, match schedule totals to bank statements, loan statements, retention reports, or payroll filings. Note any timing differences or pending items.

Pay special attention to “miscellaneous” accounts, suspense accounts, and small balances that have built up over time. For each, determine whether it should be reclassified, written off, or supported with better documentation.

Where you find errors or misclassifications, record journal entries to move amounts to the correct accounts or clear out invalid items. Clearly explain each entry in your reconciliation workpapers.

Once each account is reconciled and corrections are posted, mark the reconciliation as complete and sign or initial the schedule. Save all reconciliations in the year-end close folder, organized by account.

From your accounting system or fixed asset software, generate a list of all assets, including cost, accumulated depreciation, and net book value as of year-end. Also run a report of current-year additions and disposals.

Compare the additions list to capital purchases recorded in the general ledger. Ensure all qualifying assets (such as major equipment and vehicles) have been capitalized instead of expensed and coded to the correct asset categories.

Work with operations and equipment managers to identify assets sold, scrapped, or no longer in use during the year. Confirm sale proceeds or scrap values and record disposals in the fixed asset system and general ledger.

Check that each asset uses the correct depreciation method and useful life according to company policy and applicable accounting rules. For any that appear incorrect, adjust settings and recalculate depreciation.

Calculate depreciation for the last period of the fiscal year and post the journal entry to record depreciation expense and accumulated depreciation. Tie the entry back to the fixed asset reports.

Compare total asset cost and accumulated depreciation from the fixed asset register to the corresponding general ledger accounts. Resolve any differences and file the final fixed asset and depreciation schedules in the year-end workpapers.

Work with project managers to identify which projects have finished all major work, passed final inspections, and received final payment or are in the last minor punch-only phase.

For each such job, run detailed cost and billing reports. Confirm that all subcontractor invoices, material costs, and internal labor have been captured, and that all approved change orders have been billed.

Using the updated cost and billing data, calculate the final or near-final margin and check whether the job is under-billed or over-billed at year-end. Adjust WIP entries if needed to reflect realistic final results.

If a job has no further work, open commitments, or expected billings, close it in the project and accounting systems according to company procedures. This may involve changing status codes and restricting new cost entries.

For closed jobs with small residual balances in cost or revenue accounts, decide whether to reclassify these amounts to overhead or adjust them as part of final margin. Post journal entries to clear out immaterial amounts.

Refresh the WIP schedule and active job lists to reflect closed projects and updated margins. File a copy of the final job cost summary for each closed job in the year-end workpapers.

Reconcile total contract revenue and WIP amounts across WIP schedules, job cost reports, and the general ledger. Ensure that each job’s contract value, earned revenue, and billings-to-date line up across sources.

Identify projects showing very high or very low margins or large swings in profit compared to prior months. Flag these for deeper review with project managers.

Meet with the relevant project managers to confirm whether unusual profit patterns are due to real performance, scope changes, or data issues. Take notes on explanations and any corrections needed.

Based on these discussions and company accounting rules, record any needed year-end entries to adjust revenue recognition, cost allocations, or provisions for anticipated losses.

After posting adjustments, refresh the WIP schedule and revenue summaries. Confirm that total revenue, gross profit, and under/over-billings at year-end now look reasonable.

Write a brief explanation for significant adjustments or judgments made around revenue recognition. File this memo with WIP and revenue workpapers for reference by leadership and external accountants.

Based on local regulations and company policy, determine which vendors, subcontractors, or individuals require year-end reporting (for example, based on payment type, amount thresholds, or tax status).

From the accounting system, generate reports showing total payments to each vendor for the year, broken out by type of payment if required (for example, services vs materials).

Check that each reportable vendor has complete and up-to-date tax identification numbers and mailing addresses. Request updated forms from vendors where information is missing or appears incorrect.

Confirm that the total payments being prepared for reporting match the related expense and cost-of-sales accounts in the general ledger, allowing for any non-reportable components.

Enter verified payment amounts and vendor details into the year-end reporting templates or software used by your company or tax preparer. Double-check high-dollar and high-volume vendors for accuracy.

Save vendor payment summaries, reconciliation work, and draft forms in the year-end workpaper folder. These schedules will support the final filings and any questions from vendors or tax authorities.

Ask your CPA or tax advisor for their standard year-end document request list and timeline. Clarify any items that are unclear or do not apply to your business.

For each requested item, identify which internal report, system, or person can provide it. Assign responsibility and due dates, and add these to your year-end checklist.

Gather trial balances, financial statements, WIP reports, fixed asset schedules, reconciliations, and other requested documents. Organize them in a logical folder structure, clearly labeled with dates and descriptions.

Share the package with your external advisor through a secure portal or encrypted file transfer method. Avoid sending sensitive data through unsecured channels like general email without protection.

As the advisor reviews your information, log their questions and additional data requests. Assign each item to an internal owner, track due dates, and respond in a timely, organized way.

When the advisor provides draft tax returns or year-end reports, review them carefully for consistency with your books and key assumptions. Discuss any discrepancies or concerns and agree on final versions before filing.

Meet with company leaders to ask what they most want to understand from year-end results (for example, profitability by project type, performance versus budget, overhead trends). Write these questions down as guideposts.

Create simple, clear report formats or dashboards that answer these questions. Examples include profit by job size, gross margin by client, overhead by department, and cash and debt trends over the year.

Run the necessary detail reports and export them to spreadsheets or business intelligence tools. Clean and organize data so that it can be summarized by the categories you defined.

Construct tables and charts that show year-over-year comparisons, margins by segment, and contributions of major projects. Keep visuals simple and consistent so they are easy to interpret.

For each key metric, draft a few sentences explaining what changed, why it changed, and whether it is likely to continue. Tie observations back to specific projects, markets, or internal decisions where possible.

Share the draft management report with the finance leader to confirm that it is accurate and that explanations are fair. Incorporate their feedback, finalize the package, and prepare to present it to the broader leadership team.

Before locking the year, review the year-end journal entry list and ensure that all agreed adjustments, accruals, and reclasses have been entered and posted. Check that the final trial balance matches what was provided to external advisors.

Generate the final, official income statement, balance sheet, cash flow statement, WIP report, and key supporting schedules as of year-end. Save them as “Final” versions with clear file names and dates.

Use the accounting software’s year-end or fiscal year close functions to lock the prior year. Ensure only a small number of authorized users can unlock it, and understand what steps are required if changes ever become necessary.

Gather all reconciliations, schedules, checklists, correspondence with external advisors, and management reports into a structured folder (digital and/or physical). Label sections clearly so a new person could find items later.

Confirm that year-end financial data and workpapers are backed up according to company policy, preferably in at least two secure locations. Test that files can be restored from backup if needed.

Write a short summary of when the year was closed, any major issues encountered, and improvements to make next year. Store this note with the year-end package and update your year-end checklist based on lessons learned.