--- title: "Clean Year-End Close for Dental Practices: Checklist" description: A clean year-end close means reconciled accounts, a tied-out payroll, 1099s ready, and asset schedules ready for your preparer. Here is the checklist. image: https://reciprocityaccounting.com/hubfs/blog-images/post_64.png --- [Skip to content](https://reciprocityaccounting.com/blog/dental-practice-year-end-bookkeeping#main-content) [![](https://reciprocityaccounting.com/hs-fs/hubfs/logo-horizontal-transparent.png?width=1298&height=290&name=logo-horizontal-transparent.png)Homepage](https://reciprocityaccounting.com) - [Services](https://reciprocityaccounting.com/services) - [Pricing](https://reciprocityaccounting.com/pricing) - [FAQ](https://reciprocityaccounting.com/faq) - [Blog](https://reciprocityaccounting.com/blog) - [About](https://reciprocityaccounting.com/about) [Book a Discovery Call](https://reciprocityaccounting.com/contact) - [Services](https://reciprocityaccounting.com/services) - [Pricing](https://reciprocityaccounting.com/pricing) - [FAQ](https://reciprocityaccounting.com/faq) - [Blog](https://reciprocityaccounting.com/blog) - [About](https://reciprocityaccounting.com/about) [Book a Discovery Call](https://reciprocityaccounting.com/contact) ![Reciprocity Accounting card: A Clean Year-End Close, a How To post.](https://reciprocityaccounting.com/hs-fs/hubfs/blog-images/post_64.png?width=1200&height=630&name=post_64.png) How To # How to Prepare Your Dental Practice for a Clean Year-End Close ![Greg Hudnall](https://app.hubspot.com/settings/avatar/49dbd5c12b604f92786349ba17b92e2c) Greg Hudnall October 9, 2026 How To  ·  7 min read A clean year-end close means every account ties to an outside source, every schedule ties to the balance sheet, and every date that matters is on a list before January starts. Year-end is a normal close with higher stakes. The same things get checked, but now a W-2 goes to the Social Security Administration, a 1099 goes to the IRS, and a depreciation schedule becomes part of a tax return. Work the list below in order. Aim to have December closed by January 10, the same deadline as any other month, and the payroll tie-out finished well before February 1. ## Reconcile Every Account Reconcile means tying the balance in your books to a statement from somebody else. Bank accounts, credit cards and loans tie to the institution. Merchant and patient-financing deposits tie to the processor's batch reports. If an account has no outside document behind it, it is not reconciled. It is only balanced, and balanced is an opinion. Loans deserve a specific check. The lender's year-end statement should match your liability, and the interest it shows should match your interest expense. A loan balance that has drifted from the lender's number usually means a payment was coded entirely to expense or entirely to principal. The reconciliation that is unique to dentistry is accounts receivable. The aging report in your practice management system is the detail. The AR balance on your balance sheet is the control. They have to agree on the same date. Some systems recalculate estimated write-offs when you re-run aging for a past date, so the number can change after the fact. Whatever system you use, run the aging as of the close date and save it, rather than counting on re-running it for a past date later. A difference you can explain is a timing item. A difference you cannot explain is a problem. Our post on [aging reports](https://reciprocityaccounting.com/blog/dental-accounts-receivable-aging) covers how to read the buckets. Then look at insurance timing. A claim for December work that pays in January belongs to December on accrual-basis management books and to January on cash-basis tax books. Both views can be right at once, as long as someone has [bridged them](https://reciprocityaccounting.com/blog/how-insurance-timing-distorts-dental-financials) and written down the difference. ## Review Depreciation Schedules Your fixed-asset schedule lists what you own: cost, date bought, date placed in service, method, and accumulated depreciation. At year-end it needs three checks. Additions first. Every equipment purchase should be on the list with its invoice and its in-service date. The IRS says property is placed in service [when it is ready and available for a specific use](https://www.irs.gov/publications/p946), not when you pay for it. Equipment sitting in a box on December 31 may not count. Disposals second. Equipment you sold or scrapped and left on the schedule overstates the balance sheet. Third, tie the schedule to the balance sheet: cost less accumulated depreciation should equal what your books show for those assets. Keep a book column and a tax column, because depreciation on a return can differ from depreciation in your books. Three tax rules shape what your preparer does with that list. The de minimis safe harbor lets a business without an audited financial statement [deduct items up to $2,500 per invoice or item](https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations), elected each year by attaching a statement to a timely filed return. For qualifying property acquired and placed in service after January 19, 2025, the special depreciation allowance is [100%](https://www.irs.gov/taxtopics/tc704), and under [IRS Notice 2026-11](https://www.irs.gov/pub/irs-drop/n-26-11.pdf) a written binding contract generally sets the acquisition date. The Section 179 limit for 2026 is [$2,560,000](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf), reduced once qualifying property placed in service during the year exceeds $4,090,000. Which election fits your year is your preparer's call, based on your income and plans. The bookkeeper's job is to hand over an accurate list before anyone has to ask for it. ## Prepare 1099s The decisions about who gets a 1099 are covered in our [tax-season post](https://reciprocityaccounting.com/blog/dental-practice-tax-season-bookkeeping). The close is where you build the list. Pull a vendor payment report for calendar 2026 by payment date. The IRS ties the 1099-NEC threshold to payments made in the year, so a bill you received in December and pay in January is a 2027 payment, and an accrual-basis expense report will mislead you. The threshold for 2026 payments is [$2,000](https://www.irs.gov/instructions/i1099mec). Three checks make the list reliable. Flag every payee with no Form W-9 on file, because a missing taxpayer ID is the most common reason a 1099 stalls. Separate payments made by card or payment network, which are generally reported by the card company on a different form. And look for vendors coded to supplies or repairs that are really services. A contractor who maintains your network or cleans the office sits in an expense account that does not announce itself as a 1099 payee. If your practice uses associates or contract hygienists, classification comes before any form. The [multi-provider payroll post](https://reciprocityaccounting.com/blog/dental-practice-multi-provider-payroll) explains why that is a legal decision, not a bookkeeping one. Forms are due February 1, 2027, because January 31 falls on a Sunday. ## Payroll Reconciliation The IRS matches the amounts on your four quarterly Forms 941 to the totals on your Form W-3. The [W-2 and W-3 instructions](https://www.irs.gov/instructions/iw2w3) say to reconcile those totals with your 941s, and that discrepancies bring contact to resolve them. The fields compared are federal income tax withheld, Social Security wages, Medicare wages and Social Security tips. So the tie-out runs in three links. Payroll register totals for the year should match the sum of the four 941s. The 941 totals should match the W-2 and W-3 totals. And wages in the register should match wages in your general ledger. W-2s are due to employees and the SSA on [February 1, 2027](https://www.irs.gov/instructions/iw2w3), so any difference has to be found in January, not February. If you are an S corporation owner, you are in this reconciliation too. Your own W-2 is part of the payroll, which is why [booking owner pay as real payroll](https://reciprocityaccounting.com/blog/dental-practice-owner-compensation-bookkeeping) matters at year-end. A journal entry that relabels cash as salary does not produce a W-2. ## Accrual Adjustments and Prepaid Expenses Under an accrual method, the IRS describes the rule this way: you [report income when it is earned and deduct expenses when they are incurred](https://www.irs.gov/publications/p538). Your management books should work the same way, and year-end is where gaps show. Four adjustments come up in nearly every dental practice. First, unpaid December bills. Lab invoices, supply orders, rent, utilities and professional fees for December belong in December, even if the check goes out in January. Second, wages earned in December and paid in January are an expense of December. Third, prepaid costs, such as an annual malpractice premium or software subscription paid in December for next year, are an asset that is spread over the months they cover. The IRS has a separate 12-month rule for when a prepaid cost has to be capitalized for tax purposes. That is a tax rule and not a bookkeeping rule, and your preparer decides how it applies. Fourth, patient credit balances. A credit on a patient account is money you owe, so it should be visible as a liability and not quietly absorbed into other balances. Old credits can carry a legal obligation as well. Ohio's unclaimed funds law, for example, covers [credits owed to a retail customer that go unclaimed for three years](https://codes.ohio.gov/ohio-revised-code/section-169.02). Other states differ, so check with your state's unclaimed property office before you write off anything old. ## The Final Review Checklist | Item | Tied to | Suggested target | | --- | --- | --- | | Every bank, card and loan account reconciled | Outside statements | Jan 10 | | Merchant and financing deposits tied | Processor batch reports | Jan 10 | | Practice management AR aging agrees with balance sheet AR | Aging report saved as of Dec 31 | Jan 10 | | December work paid in January identified | Cash-to-accrual bridge | Jan 10 | | Accrued expenses and prepaids booked | Unpaid bills, insurance and subscriptions | Jan 10 | | Patient credit balances reviewed | Credit balance report | Jan 10 | | Fixed-asset schedule current, including in-service dates | Invoices and balance sheet | Jan 15 | | Vendor payment report built, W-9 on file for each payee | Ledger payments made in 2026 | Jan 15 | | Payroll register, 941s and W-2/W-3 totals agree | Payroll reports | Jan 20 | | Preparer package delivered | Closed year-end financials | Jan 20 | The targets are ours, not the IRS's. They are built to leave room before the February 1 payroll and 1099 deadlines and the March 15 filing date for S corporations and partnerships. *P.S. If your books are closed right every month, most of this list is done before December starts.* [*Reciprocity Accounting*](https://reciprocityaccounting.com) *closes your books by the 10th, so year-end is the last close of twelve, not a rebuild.* [*See how we can help your practice.*](https://reciprocityaccounting.com/contact) ## Frequently Asked Questions ### When should a dental practice finish its year-end close? Aim to close December by January 10, the same standard as any other month. Payroll and 1099 work then has until February 1, and S corporation and partnership returns are due March 15, 2027. ### What is different about a year-end close compared with a monthly close? The checks are the same, but the stakes are higher. Year-end adds the payroll tie-out to W-2s, the vendor list for 1099s, a review of the fixed-asset schedule, and a look at old credit balances, because those items feed forms that go to the IRS and the SSA. ### Do I still need to tie my practice management system to the books if I file on the cash basis? Yes. Your return may be cash-basis, but the AR balance in your books is how you manage the practice. If it does not agree with your aging report, your collection ratio and aging percentages are unreliable. ### If I buy equipment in December, does it count for this year? The IRS looks at when property is placed in service, meaning ready and available for its intended use, not when you paid. Whether a purchase makes sense, and which depreciation election to use, is a conversation for your tax preparer. ### How long should I keep year-end records? The IRS says to keep employment tax records for at least four years after the tax is due or paid, whichever is later. For income tax records, retention follows the period of limitations on the return, generally three years, and longer in specific cases such as bad-debt claims. **Related reading:** - [Why Your Dental Practice Books Should Be Closed by the 10th of Every Month](https://reciprocityaccounting.com/blog/dental-books-monthly-close-deadline) - [The 5 Most Common Bookkeeping Mistakes Dental Practices Make](https://reciprocityaccounting.com/blog/dental-practice-bookkeeping-mistakes) - [Switching to Accrual in QuickBooks: Month by Month](https://reciprocityaccounting.com/blog/dental-practice-switch-accrual-quickbooks) ## Share this post [mailto:https%3A%2F%2Freciprocityaccounting.com%2Fblog%2Fdental-practice-year-end-bookkeeping](mailto:https%3A%2F%2Freciprocityaccounting.com%2Fblog%2Fdental-practice-year-end-bookkeeping) ## Keep reading ### [![Reciprocity Accounting card: Books Ready for Tax Season, a How To post.](https://reciprocityaccounting.com/hs-fs/hubfs/blog-images/post_63.png?width=1200&height=630&name=post_63.png) How To Preparing Your Dental Practice Books for Tax Season](https://reciprocityaccounting.com/blog/dental-practice-tax-season-bookkeeping) ### [![Reciprocity Accounting card: What Your Dashboard Should Show, a How To post.](https://reciprocityaccounting.com/hs-fs/hubfs/blog-images/post_62.png?width=1200&height=630&name=post_62.png) How To What Your Dental Practice Dashboard Should Look Like](https://reciprocityaccounting.com/blog/dental-practice-financial-dashboard) | ![Reciprocity Accounting](https://reciprocityaccounting.com/hubfs/logo_horizontal_dark_transparent.png) Accounting built for dental practices. 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