Why I treat year-end bookkeeping like an inspection
After decades on calls and in crawlspaces, I treat the year-end close the same way I treat a full‑house inspection: methodical, checklist-driven, and done in the field pattern I know works. If you ignore the close until tax time you’ll spend days hunting receipts, reconciling deposits and missing deductions you actually earned. Here’s the exact, practical sequence I run through every December to end the year clean and make tax prep painless.
My December top-line checklist
- Reconcile bank and merchant accounts to inspected reports and invoices
- Clear outstanding invoices or document deferred revenue/retainers
- Collect/confirm W‑9s and prepare 1099s for subs
- Capture mileage and vehicle expenses; review GPS logs
- Inventory termite/pest supplies and consumables
- Review large purchases for Section 179 or depreciation
- Prepare the P&L and balance sheet; spot anomalies
- Back up PDFs, e-sign work authorizations, and store receipts
How I run the reconciliation — one week, focused blocks
I block two days in December for financial reconciliation and another half‑day for cleanups. Day one I reconcile bank and merchant processor deposits against invoices and reports. Day two I handle tax paperwork, mileage and equipment decisions.
Step-by-step: what I actually do
- Reconcile deposits to invoices and reports. I open my bank, Stripe/processor statements and my inspection software’s invoice list. For each deposit I match the amount and date to the invoice(s) and the inspection/termite report number. If a deposit shows short by fees, I tag the invoice with the net amount and note merchant fees as an expense. Example: a $450 inspection paid and deposited as $436 — I create a merchant fee line of $14 tied to that deposit so my P&L matches the bank.
- Clear outstanding invoices or document deferred revenue. If a client paid a retainer or pre‑paid a service plan I move that into a liability account (deferred revenue) so I don’t count it as this year’s income until the service is performed. If the invoice is unpaid, I send a statement and mark follow-up dates on my calendar.
- Mileage and vehicle expenses. I reconcile the automatic GPS logs from my phone app against the dates on my reports. This saves hours — no scribbled receipts to decipher. I then total business miles, log oil changes, tires and fuel, and decide what portion of vehicle expenses I deduct if I use the auto method instead of standard mileage (I compare both for big purchases).
- Inventory and consumables (termite/pest work). I do a physical count of bait, bait stations, chemical cartridges, and PPE. I value supplies at cost and adjust inventory in the books. If you run recurring pest service plans, this matters — it reduces COGS spikes and smooths margins.
- Large purchases: expense or depreciate? For tools, cameras, or vehicles I run quick math for Section 179 vs. multi‑year depreciation. If a camera under $1,000 lets me expense it this year, I usually do it. For bigger investments I run the three‑year projection and choose what helps taxes and cash flow.
- 1099s and contractor paperwork. If you paid any subcontractor or technician $600+ in the year, collect their W‑9 now and prepare 1099s. I keep a folder of W‑9s as I onboard subs so this step is painless in December.
- Sales tax and local requirements. If you invoice for repairs or charge sales tax on termite work in your state, reconcile collected tax and file returns. Don’t assume the software handles local quirks — verify the collected tax balances to what you owe.
- Finalize P&L, run common‑sense audits. I look for one-off large credits or unusual categories. Did a refund get booked as an expense? Did a personal charge land in business meals? Fix those before sending books to the accountant.
- Backups and documentation. I export a PDF of the year’s P&L and balance sheet, save copies of all invoices and signed work authorizations, and store them across two places (cloud + external drive). If your inspection app creates AI‑assisted PDF reports and stores e‑signatures, that greatly speeds this step.
Practical field examples
Example 1: A client paid two deposits on different dates for one multi‑visit termite job. My bank showed two deposits but the final invoice was a single combined charge. I split the invoice into two retained payments in the ledger and moved the unreconciled portion into deferred revenue until final completion. That kept my income accurate.
Example 2: I bought a thermal camera in August. I compared expensing it under Section 179 vs. depreciating over five years. Because I had lower profit that year due to an unexpected repair, expensing it made sense and freed cash. I documented the decision and saved the receipt to the equipment folder.
Simple timeline I follow
| When | Action |
|---|---|
| Now (December) | Reconcile bank, merchant deposits, mileage and inventory |
| First two weeks of January | Finish W‑9s, prepare 1099s, send year‑end statements to clients |
| By mid‑January | Deliver P&L & backups to accountant, set up estimated tax plan |
What I give my tax pro
- Year‑end P&L and balance sheet (PDF)
- Bank and merchant reconciliations
- List of fixed assets and receipts for purchases
- Mileage log and vehicle expense summary
- W‑9s and 1099 summary for subs
Tools that save me real hours
I don’t manually retype invoices into accounting software anymore. My inspection app creates invoices with the report number, accepts online payments, and tracks deposits — then I pull a single export for my accountant. Automatic GPS mileage tracking means I only verify trips, not reconstruct them from calendar notes. If you run termite or WDO work, recurring service‑plan billing and a termite module that ties service visits to invoices makes the year-end close far simpler; bonus if your software stores signed work authorizations and PDFs for each job.
For reference, I use an offline‑first inspection app that creates AI‑assisted PDF reports, handles home and termite/WDO on one platform, does invoicing and online payments, and logs GPS mileage automatically. That setup turns what used to be a week of reconciliation into two focused days.
Last practical tips
- Schedule two uninterrupted days for reconciliation — treat it like a large inspection appointment.
- Resolve any odd bank entries immediately; small discrepancies balloon if left until April.
- Document decisions on expensing vs. depreciating and keep that memo with your files.
FAQ
Q: Do I need separate income accounts for home inspections and termite/WDO work?
A: Yes — separate income categories make profitability clear and simplify sales‑tax and costing questions for termite work. Keep separate invoice series if you can.
Q: How should I treat prepaid service‑plan revenue?
A: Move prepaid amounts into a deferred revenue liability account until you deliver the service. Recognize income as visits occur or over the plan period, depending on your accounting method.
Q: What records should I hand my accountant at year‑end?
A: Provide P&L and balance sheet, bank and merchant reconciliations, fixed asset list and receipts, mileage log, W‑9s/1099s, and any sales tax filings. A single exported packet from your inspection and invoicing software speeds this up tremendously.
See it in the field, not a sales deck
Inspection Authority was built by a Certified Master Inspector who still inspects every week. Home inspections, termite/WDO reports, recurring pest-control billing, and true offline mode — in one app.