Studio Designer Year-End Checklist: How to Close Your Books PERFECTLY for Tax Season (Part 1)
Learn how to close your financial year cleanly, protect your profit, and eliminate the hidden accounting mistakes that quietly drain design businesses.
If you’ve ever felt anxious heading into tax season, confused by reports that don’t quite add up, or unsure whether your numbers truly reflect reality, this conversation will fundamentally change how you manage your business finances. This session breaks down the exact year-end financial systems, reconciliation habits, and reporting discipline that separate financially confident design firms from those constantly reacting to surprises.
Led by Studio Designer and financial expert Julia of New Age Financial Consulting, this discussion cuts through the noise. There’s no sugarcoating. You’ll see exactly how real firms clean up their books, correct years of accumulated errors, and enter the new year with clarity, compliance, and control.
Inside this discussion, you’ll learn the non-negotiable financial practices every serious design firm must master:
Why Reconciliation Is the Foundation of Everything
You’ll learn why reconciling every bank account, credit card, and loan is the first and most critical step before reviewing any financial reports. Lingering transactions, unreconciled balances, and old discrepancies don’t just create messy books, they distort income, inflate expenses, and can cause incorrect 1099 reporting. This section reinforces a hard truth: if your accounts aren’t reconciled, your reports cannot be trusted.
How to Read Your Balance Sheet Like a Business Owner (Not a Bookkeeper)
The video shows how to use the balance sheet as a diagnostic tool, not just a formality. You’ll learn what red flags to watch for, negative cash balances, bloated undeposited funds, suspense accounts that aren’t zero, mismatched subledgers, and why assets must always equal liabilities plus equity. If they don’t, something is broken, and ignoring it only compounds the damage.
The Real Tax Risk Hidden in Accounts Receivable
Because Studio Designer is accrual-based, anything you invoice is treated as income, even if the client never pays. You’ll learn how unpaid and outdated AR silently increases your tax burden, and why year-end is your last chance to void invoices or properly write off bad debt. This section makes it clear: unresolved AR isn’t just annoying, it’s expensive.
Client Deposits, Deferred Income, and Avoiding Costly Misclassification
This conversation clarifies one of the most misunderstood areas in design accounting: client deposits. You’ll learn how deposits should live on the balance sheet, not the income statement, until invoiced, and how improper handling can accidentally trigger premature taxation. The client deposit report becomes a key control point for understanding real project cash versus earned revenue.
Using Project and Work-in-Progress Reports to Find Missing Revenue
You’ll see how project-level reports expose money applied but never invoiced, projects that should be closed but aren’t, and funds sitting idle due to incomplete cleanup. This is where operational gaps turn into financial leakage. The takeaway is direct: unfinished projects often mean unfinished billing.
Cleaning Up Accounts Payable Before It Pollutes Your Financials
Old purchase orders and unpaid AP don’t just clutter reports, they ripple into inventory, cost of goods sold, and profitability. You’ll learn how to evaluate whether old AP should be voided, adjusted, or investigated, and why there’s no single “quick fix.” Every decision must reflect reality, not convenience.
Inventory: The Asset Most Firms Forget to Verify
Inventory is real money sitting somewhere, on shelves, in storage, or forgotten entirely. This video emphasizes the importance of year-end physical inventory counts, reconciling quantities and costs, and writing off lost, damaged, or obsolete items. Leaving incorrect inventory on the balance sheet falsely inflates your business value and delays expense recognition.
What Closing the Year Actually Does (and Why It Matters)
Closing a year doesn’t erase data, it locks it. You’ll learn why once a year is closed, general ledger entries can’t be edited or deleted, and why that finality makes pre-close cleanup essential. Closing the year is a declaration that your financials are accurate, and that declaration has real consequences.
The Essential Reports Every Principal Should Review
The session outlines the core reports leadership should always see:
Income Statement
Balance Sheet
Accounts Receivable
Accounts Payable
Client Deposit Report
(Optional: Work-in-Progress)
These reports together provide a full picture of profitability, risk, and cash reality.
Why Legacy Reports Are a Hidden Power Tool
You’ll discover why legacy reports, often overlooked, are the most effective way to trace errors, follow money movement, and understand long-term financial history. When something doesn’t make sense, legacy reports usually hold the answer.
Why This Matters More Than Ever
This video reinforces a central truth:
Financial clarity doesn’t come from working harder, it comes from disciplined systems.
Every unreconciled transaction becomes a future problem.
Every ignored discrepancy turns into lost profit or tax exposure.
Every clean report strengthens decision-making.
This is a must-watch for any designer who wants to enter the new year with confidence, clean books, and full control over their numbers.
You’ll walk away with a sharper financial mindset, a clear cleanup roadmap, and the systems needed to protect your revenue, reduce risk, and run your studio like a real business, not a guessing game.
-
Closing the year is one of those moments most business owners quietly dread. It feels tedious, overwhelming, and often uncomfortable. But the truth is this: closing the year is not about paperwork or software prompts. It’s about discipline. It’s about accuracy. And most of all, it’s about protecting the money you’ve already worked so hard to earn.
Too many businesses treat year-end as a formality—something to rush through just to “get it done.” In reality, it’s your final opportunity to correct mistakes that directly affect your taxes, your cash flow, and your ability to trust your own numbers. What you choose to face now—or avoid—will follow you straight into the next year.
Year-End Is a Habit Check, Not a Task
Closing the year has a way of revealing the truth. It shows you exactly how you’ve been operating behind the scenes. Your financial habits—good or bad—become impossible to hide.
Messy cleanup is uncomfortable, but it’s also where growth begins. Every painful correction forces better systems, clearer thinking, and stronger decision-making. On the other hand, what you ignore now doesn’t disappear. It turns into tax surprises, unreliable data, and lost money later. Year-end is less about closing a calendar and more about taking responsibility for how your business actually runs.
Reconciliation Comes First—Always
Before you look at a single report, there is one non-negotiable step: reconciliation.
Every bank account, every credit card, every loan must be reconciled. No exceptions. Lingering transactions are not harmless—they are red flags. Old unreconciled items distort your income, your balance sheet, and even your 1099s.
Credit cards deserve special attention because they behave differently. They are liabilities, not cash, which means debits and credits work in reverse. And if a transaction is tied to a purchase order, you can’t simply delete it—you can only void it. These details matter.
There’s a simple rule to remember here: if your reconciliations aren’t clean, your reports are lying. Everything else depends on this step being done correctly.
Reports Are Your Control System
Reports aren’t something you pull just because an accountant asks for them. They are how you run a real business.
You begin with two foundational documents: the income statement and the balance sheet. These reports tell the story of your business, but only if you know how to read them.
One principle governs everything: assets must equal liabilities plus equity. If they don’t, something is broken. Studio Designer will even alert you when things are out of balance—but those emails only help if you take them seriously.
The Balance Sheet Tells the Truth
Think of the balance sheet as truth serum. It doesn’t care about intentions or explanations—it shows what’s really happening.
Undeposited funds often signal old or misapplied client money. Negative cash balances are simply incorrect. Suspense accounts should always return to zero. Vendor deposits, accounts receivable clearing, inventory, and accounts payable all require careful, line-by-line review.
Suspense accounts do have a purpose, but their job is temporary. Zero is the goal. Anything left behind is unfinished business.
Accounts Receivable Is a Hidden Tax Risk
This is where many firms get hurt without realizing it. Studio Designer operates on an accrual basis, which means once you invoice a client, that amount is treated as income—whether the client pays you or not.
Old accounts receivable don’t just clutter reports. They represent taxes you may have already paid on money you never received.
The solution starts with pulling the “Accounts Receivable by Invoice by Item” report. Anything old needs investigation. You either void the invoice, which reverses income, or you write it off to bad debt so losses are tracked clearly.
Ignoring old AR is one of the quietest ways businesses bleed money.
Client Deposits Are Deferred Income—If You Treat Them Correctly
Client deposits are one of the most misunderstood areas in financial reporting. Deposits are not income until they are invoiced. They belong on the balance sheet, not the income statement.
If deposits are accidentally treated as cash-basis income, they can become taxable immediately—even when no work has been completed.
This is why the client deposit report is essential. It shows proposal deposits, funds available, and applied amounts. If this report doesn’t match the balance sheet, something is wrong and needs to be fixed now, not later.
Project and Work-in-Progress Visibility Is Non-Negotiable
Your project and work-in-progress reports reveal what’s incomplete, forgotten, or overlooked. They show money applied but not invoiced, funds sitting idle, and projects that should be closed but aren’t.
When a project is finished and money is still sitting there, a decision must be made. You invoice it, refund it, or move it according to the contract. Leaving it unresolved means missing revenue or misreporting income.
Unfinished cleanup always costs you something.
Old Accounts Payable Is Almost Always Wrong
Accounts payable tells another important story. Pulling “Accounts Payable by Order by Item” often reveals purchase orders that have been open for years. In most cases, that’s not normal—it’s an error.
The causes are usually familiar: abandoned orders, forgotten voids, misposted payments, or inventory that was received but never paid for.
There’s no single fix. You void orders that were never paid or received. You adjust costs when inventory exists. You only zero things out when you fully understand the consequences. Accounts payable issues ripple into inventory, cost of goods sold, and ultimately your profit.
Inventory Is Real Money Sitting Somewhere
Inventory is an asset until it’s sold, which means it represents real money sitting somewhere—on shelves, in storage, or forgotten entirely.
Year-end best practice includes a physical inventory count. Quantities and costs must match reports. Anything lost, damaged, stolen, or obsolete should be written off. Leaving incorrect inventory on the books inflates your assets and delays expense recognition.
Inventory adjustments are permanent. They deserve care and intention.
Closing the Year Locks the Past
Closing the year doesn’t erase anything. You don’t lose data—you lose the ability to change it.
Once a year is closed, you can’t edit general ledger entries or delete transactions. This protects financial integrity, but only if your data is correct first. Closing the year is essentially declaring, “This year is accurate.” That declaration has weight.
The Core Reports Leadership Needs
At minimum, principals should review the income statement, balance sheet, accounts receivable, accounts payable, and the client deposit report. Depending on how the firm operates, work-in-progress may also be critical.
Together, these reports show profitability, risk exposure, and cash reality.
Why Legacy Reports Are Power Tools
Legacy reports often provide the clearest insight. They show full transactional history, make tracing errors possible, and are often easier to read than newer financial forms. When something doesn’t make sense, legacy reports usually hold the answer.
If you want real clarity, this is where you live.
The Bottom Line
Closing the year is not about checking a box. It’s about accuracy. It’s about ownership. It’s about protecting profit and preventing chaos from spilling into the future.
Every unresolved transaction becomes a future problem. Every cleaned report strengthens your business. And if it’s messy now, it only gets more expensive later.
Closing the year well isn’t just good accounting—it’s good leadership.
