Your Year-End Construction Accounting Checklist: 10 Steps to Close Out Strong

(By Craig Auer, Northern Colorado’s Construction Accounting Expert)

When the year winds down, most contractors are focused on finishing projects and wrapping up work — not paperwork. But taking time to organize your financials can have a big payoff. Year-end construction accounting isn’t just about taxes; it’s about understanding your profitability, improving cash flow, and entering the new year with confidence.

At AuerCPA Co., we help construction businesses across Colorado simplify their books, reduce year-end stress, and uncover hidden opportunities. Here’s your comprehensive, step-by-step checklist to close out the year strong.

1. Review Every Job’s Financial Performance

Before you finalize your year-end numbers, look closely at each active and completed project:

• Are budgets current and accurate?
• Are there any open invoices or outstanding change orders?
• Did actual costs align with estimates?

Why it matters: Reviewing job profitability reveals which projects boosted your margins and which ones drained your resources.

💡 Pro Tip: Run a Job Cost Report in your accounting software (see QuickBooks Job Costing Guide) to catch missing expenses or unrecorded change orders.

2. Reconcile Bank and Credit Card Accounts

Make sure your books reflect your true cash position. Reconcile all bank, credit card, and vendor accounts.

• Match transactions to bank statements
• Investigate discrepancies or duplicate entries
• Verify deposits and transfers

Even small errors can snowball into reporting issues later, so tackle them now.

3. Review Retainage and Accounts Receivable

Retainage and unpaid invoices can hide thousands of dollars in uncollected revenue.

• List all outstanding retainage amounts
• Identify invoices that can be collected before year-end
• Follow up with clients or general contractors

4. Verify Subcontractor Information and Compliance

Organize W-9s and payment records for every subcontractor you paid this year. This ensures accurate Form 1099-NEC reporting in January and avoids last-minute compliance issues.

Checklist:

• Confirm subcontractor contact info
• Review total annual payments
• Flag any vendors missing tax IDs

5. Review Equipment, Vehicles, and Depreciation

Did you buy new vehicles, tools, or heavy equipment this year? Make sure these purchases are correctly recorded in your asset register.
Some purchases may qualify for Section 179 deductions, which can significantly reduce your tax liability.

💡 Ask your CPA: “Should I claim Section 179 this year or spread depreciation over time?”

6. Update Work-in-Progress (WIP) Reports

Your Work-in-Progress (WIP) report is the backbone of accurate construction accounting.
It shows how much revenue you’ve earned to date and what remains on each project.

• Verify completion percentages
• Adjust costs and billings
• Reconcile WIP with your general ledger

Accurate WIP reporting prevents overbilling, underbilling, and tax surprises.

7. Audit Payroll and Employee Records

Confirm all payroll taxes, withholdings, and filings are up to date.

• Verify employee addresses for W-2s
• Review pay rates and bonuses
• Double-check state and federal tax payments

Clean payroll data now means fewer corrections during tax filing season.

8. Review Business Expenses and Tax Deductions

Now is the time to identify every legitimate deduction that lowers your taxable income. Common overlooked deductions for contractors include:

• Vehicle mileage, fuel, and maintenance
• Tools and small equipment
• Continuing education or certifications (OSHA Training and Certification)
• Office supplies and construction management software

Even small deductions add up — and your CPA can ensure they’re fully documented and compliant.

9. Schedule a Year-End Strategy Session with Your CPA

Before you wrap up your end-of-year numbers, meet with your accountant to discuss last-minute tax strategies and planning opportunities.
Topics to review:

• Whether to prepay 2026 expenses
• Timing of equipment purchases
• Adjusting owner draws or distributions
• Evaluating your current business structure (LLC vs. S Corp, etc.)

A proactive meeting now can save you time, money, and stress later.

10. Set Financial Goals for the New Year

Once your books are clean, look ahead. Use what you’ve learned this year to plan for next.
Ask yourself:

• Which project types delivered the highest margins?
• Should you raise rates or re-evaluate costs?
• Are there systems or reports that could make 2026 smoother?

Goal-setting helps align your financial strategy with your business growth plans — and ensures your books support your success.

💡 Need Help Closing Out the Year?

If your year-end checklist feels overwhelming, you’re not alone. Construction accounting can be complex — especially in Colorado, where job costing, retainage, and multi-location projects add extra layers of detail.

At AuerCPA Co., we specialize in helping construction contractors simplify their finances, stay compliant, and make smart year-end tax decisions.

👉 Schedule your Year-End Review to start 2026 with clarity and confidence.

Contact Us | Learn More About Our Construction CPA Services

FAQ: Year-End Construction Accounting

1. Why is year-end accounting important for construction companies?
   Year-end construction accounting helps contractors confirm accurate job costs, reconcile accounts, and prepare for tax season. It ensures financial clarity, reduces audit risk, and sets a strong foundation for growth in the coming year.
2. What deductions do construction companies often miss?
   Commonly missed deductions include small tools, equipment rentals, business mileage, continuing education, and software subscriptions. A CPA specializing in construction accounting can help ensure every eligible deduction is captured.
3. When should contractors meet with their CPA for year-end planning?
   Ideally, before December 31, but it’s never too late to get your numbers organized. Meeting early allows time to adjust spending, prepay expenses, or make key financial decisions that affect current-year taxes.