Year-End Accounting Checklist for Filipino Businesses (2026)

December is simultaneously the best month for sales and the worst month for accounting. While you're managing holiday rush orders, maximizing promotional campaigns, and releasing 13th month pay, your accountant needs you to close your books for the entire year.

This checklist gives you everything you need to close 2025 clean — and hand over the right documents so your accountant can prepare and file your 2025 Annual Income Tax Return by April 15.

Why Year-End Matters More Than Monthly Close

Monthly bookkeeping is about staying current. Year-end close is about accuracy and completeness. At year-end, you need to:

• Reconcile everything (not just bank accounts, but all balance sheet items)
• Make adjusting entries (depreciation, prepaid expenses, accrued liabilities, inventory write-offs)
• Prepare audited financial statements (required for corporations, partnerships, and individuals with gross sales over ₱3M)
• File your Annual ITR with all supporting schedules and attachments

If your monthly books are in good shape, year-end close takes 1–2 weeks. If you've been deferring monthly reconciliation all year, it can take months — and your April 15 filing becomes an April 15 extension request.

December Tasks (Before December 31)

1. Physical Inventory Count

If you carry inventory (retail, wholesale, manufacturing, food service), you must conduct a physical inventory count before December 31. This is not optional for tax purposes — your year-end inventory value affects your reported cost of goods sold and therefore your taxable income.

How to do it:

• Stop all receiving and issuing of goods during the count
• Assign teams to count sections simultaneously
• Record item, unit of measure, and quantity — no prices on the count sheet yet
• Price the inventory separately afterward (using cost, not selling price)
• Investigate count differences greater than 3% in high-value categories

Common mistakes:

• Counting goods in transit (in-transit inventory has specific accounting treatment)
• Including consignment goods owned by others in your count
• Using selling price instead of purchase cost for valuation

2. Bank Reconciliation — All Accounts

Reconcile every bank account and e-wallet as of December 31:

• BDO, BPI, Metrobank, UnionBank, Landbank, or whatever banks you use
• GCash business account
• Maya business account
• PayMongo or other payment processor settlement accounts

For each account, the bank balance per bank statement must agree with the balance per your books (after adjusting for outstanding checks and deposits in transit).

If they don't agree — find out why. Common causes:

• Outstanding checks (checks issued but not yet cleared)
• Deposits in transit (deposits made but not yet reflected in the bank statement)
• Bank errors
• Unrecorded bank charges or interest
• Unrecorded transactions in your books

Every unreconciled peso is a potential error in your financial statements.

3. Accounts Receivable Aging Analysis

Print or export your complete AR aging report as of December 31. This lists every customer with an outstanding balance, sorted by how long the invoice has been outstanding:

• Current (0–30 days): Normal
• 31–60 days: Follow up
• 61–90 days: Call the customer
• Over 90 days: Consider bad debt provision

For invoices you believe are uncollectable, you need to set up an Allowance for Doubtful Accounts — a provision against potentially bad receivables. This affects both your balance sheet and your income statement. Your accountant will guide you on the appropriate provision amount.

4. Accounts Payable Review

Review all outstanding bills from suppliers:

• Are all bills recorded? Check against supplier statements.
• Are there bills received but not yet recorded?
• Are there any disputed charges that need resolution?

Year-end is when suppliers send their own statements. Use these to verify your AP balance matches theirs. Any discrepancy requires investigation.

5. Verify 13th Month Pay Is Calculated and Paid

By December 24, you must pay 13th month pay to all covered employees. Before paying:

• Verify the computation for every employee (Total Basic Pay Earned ÷ 12)
• Account for employees hired mid-year (prorate their 13th month)
• Account for employees who resigned during the year (they are still entitled if they worked at least one month)
• Check that the ₱90,000 combined 13th month + bonus exemption threshold has been correctly applied for withholding tax purposes

After payment, update your payroll records and prepare to submit the DOLE 13th Month Pay Compliance Report by January 15.

January Tasks (After December 31)

6. Prepare Year-End Adjusting Entries

Your accountant will prepare these, but you need to provide the information:

Depreciation:
Every fixed asset (computers, equipment, furniture, vehicles) has an annual depreciation expense based on its cost and useful life. Provide your accountant with a list of all assets and their acquisition dates and costs.

Prepaid expense amortization:
If you paid insurance premiums, rent, or other expenses covering periods beyond December 31, only the portion applicable to 2025 is an expense. The balance is a prepaid asset.

Accrued liabilities:
Expenses incurred in December but not yet paid or billed (utilities, professional fees, rent for December billed in January) should be accrued in December — not recorded when you pay in January.

Inventory write-off:
Items identified in the physical count as damaged, expired, or unsaleable should be written off. You need a list of these items with cost values.

Bad debt provision:
Based on your AR aging analysis, your accountant will estimate the provision for doubtful accounts.

February–March Tasks

7. Gather Your BIR Filing Documents

Your accountant needs these to prepare and file your Annual ITR:

Income documentation:

• Sales journal / OR log for the full year
• Platform payout reports (if you sell on Shopee, Lazada, etc.)
• Bank statements for all accounts, January–December

Expense documentation:

• All ORs/SIs for business expenses, sorted by month
• Payroll records (total compensation paid, withholding tax remitted)
• BIR Form 2307s received from clients (creditable withholding tax)

Asset/liability documentation:

• List of assets purchased or disposed of during the year
• Loan statements (balance as of December 31, interest paid during the year)
• Lease agreements if you rent your business space

Prior year documents:

• Your 2024 Annual ITR (for reference on carry-forward items)
• 2024 Audited Financial Statements (if applicable)

8. Required Financial Statements

For individuals with gross sales above ₱3,000,000:
Audited Financial Statements (AFS) must be prepared and signed by an independent CPA. The AFS includes the Balance Sheet, Income Statement, Statement of Cash Flows, and Notes to Financial Statements.

For corporations and partnerships (all sizes):
AFS is required regardless of revenue size. File with the BIR and SEC.

For individuals with gross sales below ₱3,000,000:
AFS is not required. You file your ITR with financial statements prepared by your own accountant (not necessarily audited).

April 15 Filing Deadline

Annual ITR Due Dates

Taxpayer Type	Form	Deadline
Individual self-employed (non-8% rate)	1701	April 15
Individual self-employed (8% flat rate)	1701A	April 15
Corporation	1702RT	April 15
Partnership	1702RT	April 15

Also due January 31 (don't forget):

• BIR Form 1604CF — Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (your annual payroll summary for employees)

The Complete Year-End Checklist

Print or save this and check items off as you complete them:

December (before December 31):

• Physical inventory count completed and documented
• All bank accounts reconciled as of December 31
• AR aging report prepared; doubtful accounts identified
• AP review completed; all supplier statements reconciled
• 13th month pay computed and paid by December 24
• Fixed asset list updated (additions and disposals in the year)

January:

• Adjusting entries prepared by accountant (depreciation, accruals, prepaid amortization, bad debt provision)
• DOLE 13th month compliance report submitted (due January 31)
• BIR annual registration fee paid (due January 31)
• BIR Form 1604CF filed (due January 31)
• Document collection started (ORs, bank statements, 2307s)

February–March:

• All documents handed to accountant
• Financial statements prepared (and audited if required)
• Annual ITR draft reviewed by business owner

April:

• Annual ITR filed and paid by April 15
• AFS filed with SEC (corporations, partnerships)
• All documents filed and stored (7-year BIR record-keeping requirement)

How Akauntants Reduces Year-End Work

When you use Akauntants throughout the year, many of these checklist items are already done by December:

• Bank reconciliation is done monthly automatically through bank feeds
• AR aging is live at all times — no year-end chase for outstanding invoices
• Payroll records are complete and exportable for DOLE and BIR compliance
• 2307 log — all creditable withholding tax received is tracked throughout the year
• Depreciation — set up your assets once, depreciation runs automatically every month
• BIR returns — quarterly returns filed throughout the year mean no year-end backlog of unfiled returns

By April, your accountant receives clean, complete data — and the focus shifts from reconstruction to review and advice.

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Filing deadlines, required forms, and documentation requirements are governed by the National Internal Revenue Code and BIR regulations current as of 2026. Deadlines are subject to change by BIR circular — always verify with the BIR or your accountant before filing.