Year-End Financial Checklist for Contractors 2025

It's December, and Your Books Are a Mess

You just wrapped a big project. The client's happy, the work looks great, but you've got three uncashed checks sitting in your truck, a pile of receipts in your glovebox, and you're pretty sure you forgot to invoice someone back in October. Your accountant's already texting about tax documents, and you haven't reconciled your QuickBooks since... September?

Sound familiar?

Year-end doesn't have to be chaos. This checklist will help you wrap up 2025 efficiently, find money you didn't know was sitting there, and enter 2026 with clean books and predictable cash flow - without spending your entire holiday season buried in paperwork.

1. Reconcile All Accounts and Outstanding Invoices

Review Outstanding Receivables

Go through every unpaid invoice and categorize them:

• Collectible within 30 days - Follow up immediately with payment reminders
• Aged 30-60 days - Escalate with phone calls and payment plans
• Aged 60+ days - Consider collection strategies or write-offs for tax purposes

Many contractors discover thousands of dollars in forgotten invoices during year-end reviews.

Pro tip: If you're still waiting for checks, you're adding 10-12 days to every payment cycle. Switch to digital invoicing with payment links so clients can pay instantly, and you can close out receivables before December 31st.

Reconcile Bank Statements and Accounts Payable

Match every transaction in your bank account to your accounting records

‍If you're using QuickBooks but manually entering transactions, this process can take days. Automated QuickBooks integration syncs payments and expenses in real-time, eliminating reconciliation headaches.

Don't forget what you owe.

List all outstanding vendor and subcontractor payments, verify payment terms, and confirm 1099 information is accurate. With streamlined vendor payment tools, you can schedule payments efficiently without manual check-writing.

2. Maximize Tax Deductions Before December 31st

Year-end is your last chance to reduce your 2025 tax liability.

Accelerate Deductible Expenses

If you're planning major purchases for early 2026, consider buying them in December instead:

• Equipment and tools - Section 179 allows you to deduct the full cost of qualifying equipment (up to $1,250,000 for 2025)
• Vehicle purchases - Trucks and work vehicles may qualify for immediate expensing
• Software, supplies, and professional services - Prepay for items you'll use in 2026

Important: You must purchase AND place the item in service by December 31st to qualify for 2025 deductions.

Consider Bonus Depreciation

Bonus depreciation is phasing out:

• 2025: 40% bonus depreciation available
• 2026: Drops to 20%
• 2027: Drops to 0%

If you're planning equipment purchases, doing them in 2025 gives you a higher first-year deduction. The window is closing.

Review Retirement Contributions

Contractors can make significant tax-deductible retirement contributions:

• Solo 401(k) - Up to $70,000 for 2025 ($77,500 if 50+)
• SEP IRA - Up to 25% of compensation, maximum $70,000
• Simple IRA - Up to $16,500 ($20,000 if 50+)

Consult your accountant about which option works best and the specific deadlines (some plans allow contributions into early 2026 for the 2025 tax year).

Digital receipt capture through business card services can automatically categorize and store receipts, making tax time significantly easier.

Disclaimer: Tax laws are complex and change frequently. Always consult with a qualified accountant or tax professional for personalized advice specific to your business situation.

3. Prepare for 1099 Filing Requirements

If you paid any subcontractors or vendors $600 or more during 2025, you're required to file 1099-NEC forms by January 31st, 2026.

Create Your 1099 List Now

Don't wait until January:

1. List every subcontractor and vendor you paid $600+ in 2025
2. Verify you have W-9 forms on file for each (legal name, address, TIN/EIN)
3. Calculate total payments made to each throughout the year
4. Flag any missing information and collect it before year-end

Common 1099 Mistakes to Avoid

• Missing W-9 forms - you can't file without the vendor's tax ID number
• Incorrect legal names - use the exact name from the W-9, not DBA names
• Wrong form type - most contractors need 1099-NEC, not 1099-MISC
• Late filing - January 31st deadline is firm; late filing incurs penalties

Payment Method Tip

Payments made via credit card or payment processor are reported by the processor, not by you. If you paid a subcontractor via business check, you file a 1099. If you paid via credit card, the card processor files it. This is one reason many contractors are switching to card-based vendor payments.

4. Review Your Banking Infrastructure

Year-end is the perfect time to evaluate whether your banking setup is helping or hurting your business.

Calculate What Your Current Banking Costs You

Most contractors don't realize the true cost:

• Hours spent on bank trips and waiting for checks to clear (3-5 days)
• Monthly account fees, wire transfer fees, check ordering costs
• Payment processing fees that eat into margins
• Limited FDIC coverage (only $250K standard)
• Opportunity cost of delayed payments

Many contractors discover they're losing $10,000-$30,000+ annually to inefficient banking processes.

What Modern Construction Banking Should Include

As you plan for 2026, your banking infrastructure should provide:

• Instant invoice payment options (ACH, card, wire) with payment links
• Automatic QuickBooks sync when payments arrive
• Free ACH transfers to vendors and digital bill pay
• Extended FDIC coverage beyond $250K (look for $3M+)
• Real-time financial visibility across all projects
• Mobile access for jobsite payments

If your current banking setup doesn't check these boxes, you're starting 2026 with the same inefficiencies that slowed you down in 2025. Explore banking built specifically for construction.

5. Plan Your 2026 Cash Flow and Goals

Project Your Q1 Cash Needs

Construction often slows in winter, but your expenses don't. Estimate your fixed costs for January-March, list projects starting in Q1, and identify potential cash flow crunches before they happen.

If you have strong cash flow in December, consider setting aside 3-6 months of operating expenses as an emergency fund.

Set Clear Financial Targets for 2026

Define specific, measurable goals:

• Revenue target and profit margin percentage
• Project volume and average project size
• Days sales outstanding (DSO) target

Review Your Pricing

Use year-end financial data to inform pricing decisions. Calculate your true cost per project type, identify which services are most profitable, and adjust pricing to account for 2026 cost increases (labor, materials, insurance).

6. Take Action Before December 31st

Year-end financial planning isn't something you can do in January. Many of these strategies only work if you take action now.

Your Year-End Action Plan:

This Week:

1. Pull your outstanding receivables report and start collection calls
2. List all subcontractors who need 1099s and verify you have their W-9s
3. Schedule a meeting with your accountant to discuss tax strategies

Before December 15th:

1. Make any equipment purchases you want to deduct in 2025
2. Reconcile all bank and credit card accounts
3. Review and maximize retirement contributions

Before December 31st:

1. Collect as many outstanding invoices as possible
2. Pay any expenses you want to deduct this year
3. Finalize your 1099 contractor list
4. Set up your 2026 financial tracking systems

Early January 2026:

1. File 1099s by January 31st deadline
2. Meet with accountant to finalize tax returns
3. Review year-end reports and set 2026 goals

Enter 2026 With Confidence

The difference between contractors who grow consistently and those who struggle often comes down to financial systems and planning. You can't control material costs or weather delays - but you can control how efficiently your money moves.

Truss delivers enterprise-grade banking infrastructure built exclusively for construction businesses. We combine deposit accounts with up to $3M FDIC coverage, instant payment processing, seamless QuickBooks integration, and vendor payment tools in one simple platform - so you can close out 2025 strong and enter 2026 with the financial infrastructure to support your growth.

Ready to streamline your construction banking? See why contractors choose Truss →

Or sign up in minutes and start the new year with modern banking that actually works for construction.

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Close out 2025 by reconciling accounts, maximizing tax deductions (Section 179: $1.25M, bonus depreciation: 40%), preparing 1099s, reviewing your banking infrastructure, and planning 2026 cash flow. Take action before December 31st to optimize your tax position and enter the new year with clean books. Streamline your construction banking with Truss.

Disclaimer: Truss provides tools to help contractors manage and streamline payments. However, Truss is not responsible for financial, legal, or employment decisions made by its users. Always consult with an accountant or legal professional for personalized advice.