As the year wraps up, it’s the perfect time to spot year end financial red flags that could cause stress once tax season hits. If you’re a small service-based business owner, freelancer, or creative, these last few weeks are your opportunity to tighten up your financial picture before deadlines arrive. You don’t need a full overhaul… just attention to a few key areas that make the biggest difference.
Below are the red flags I see every year and what you can do about them right now.
1. Unreconciled Bank and Credit Card Accounts
If your accounting software balance doesn’t match your bank statement, something is off. It could be a missing transaction, a duplicate, or a change made after the last reconciliation. This is one of the most common year end financial red flags because it affects every part of your reporting.
Clean numbers help you understand your profit, know what you’ll owe, and avoid surprises in January. When the balances
Pro Tip #1: When accounts don’t reconcile, it’s usually because a transaction was changed or deleted after your last reconciliation. You may have to “UNDO” the previous reconciliation where the change happened and start fresh from that point. Once that lines up, move to the next month. You’ll feel the tension release the moment everything finally matches up. I love when everything clicks… it gives me that quiet sense that all is right.
Pro Tip #2: If you do project-based work, FreshBooks makes tracking time, invoicing, and project costs incredibly simple.
2. Invoices That Haven’t Been Sent or Paid
Unsent invoices or aging receivables are classic red flags. They create inaccurate income reports and lead to cash-flow problems right when you need clarity the most. December is the time when many clients want to settle their accounts before year-end. So it’s the perfect moment to reach out.
A gentle reminder can bring in income you earned months ago.
Pro Tip: A simple message works wonders: “Hey, I’m wrapping up my year-end reporting and noticed this invoice is still open.” Most clients respond quickly when they know it helps you close your books. If you’ve been wanting consistent invoicing or automated reminders, that’s one of the many things I help clients set up. They rarely have to chase payments again.
3. Using Personal Accounts for Business Expenses
It happens to almost everyone: you’re in a hurry and use the wrong card. One or two slips are easy to fix… but if it becomes a pattern, your books become unclear and you risk missing valid deductions.
This is an important year-end step because sorting it out now is easier than digging through a mix of personal and business transactions later.
Pro Tip: Don’t feel bad if this is you. It’s more common than you realize, especially during busy seasons. Take a few minutes to scroll your statements and flag anything business-related that hit a personal account. Move the money if needed. That small step gives your books much more accuracy heading into tax time.
4. Missing Receipts and Documentation
If your receipts live in your email, your camera roll, your downloads folder, your cloud drive, and maybe your desk drawer, take heart… you’re not the first and you won’t be the last. Missing documentation creates stress at year-end because you need those receipts to support your expenses.
Gathering them now makes everything easier later.
Pro Tip: We’re all busy, and receipts have a way of piling up everywhere. Create one folder on your computer or cloud drive labeled “2025.” Drag every new receipt into that folder for the year. Going forward, use your mobile phone to take photos of paper receipts and upload them directly to that same folder. It’s simple, reliable, and keeps everything in one place. Better still: use your cloud accounting mobile app to snap the receipts and upload directly into your financial app!
5. No Plan for Taxes Owed
If you haven’t set aside money throughout the year, you’re not alone. Many small business owners don’t look at their year-to-date profit until December… and that’s when they realize their tax bill might be higher than expected.
This is not tax advice… it’s just a reality check. Look at your income so far, apply your usual percentage, and see if you need to set money aside before the year ends.
Pro Tip: I transfer 30% of every payment I receive into a separate tax savings account (within my BlueVine business account. This way I earn pretty reasonable interest on the combined total of all my accounts. ) Even though I’ve never had to pay that much. But I love the feeling of having a cushion. And yes… I allow myself to use any leftover for a vacation or the occasional splurge on new tech gear.
A Better Year-End Wrap-Up Plan
Instead of thinking of year-end cleanup as a list of chores, think of it as a way to give yourself a cleaner starting point for the new year. Here are a few steps I recommend that go beyond the basics:
- Create a single “Year-End” folder
Add your bank statements, mileage log, receipts, and any financial spreadsheets. Having everything in one place makes tax prep or future documentation requests much easier. - Download all financial statements before they disappear
Banks and credit card companies often archive or remove older statements. Save the full year now so nothing goes missing later. - Review subscriptions or tools you no longer need
Instead of worrying about past expenses, decide what to keep or cancel moving forward. This simple step helps you start the year with less clutter and lower costs. - Check your vendor list for accuracy
Updated emails and mailing addresses make January smoother, especially if you’ll be issuing 1099s. - Review what you paid each contractor
If you hired independent contractors, now is the time to verify totals so you’re not scrambling in January.
For a deeper look at contractor requirements, here’s a helpful article: Your Quick Guide to 1099 Prep
Ready to Start the New Year More Confidently?
If these year end financial red flags feel familiar, you’re in good company. Most small business owners wait until the end of the year to sort things out… and that’s when the overwhelm shows up.
You don’t have to do this alone.
Let’s talk and see whether my services are the right match for you. This conversation is simply to explore fit. It isn’t a space for free advice or deep financial analysis… just a friendly chance to get to know each other and see what you need.
Book your complimentary 20-minute Let’s Get Acquainted call now.
