A SaaS year-end close is the normal month-end close plus the tasks that only happen once a year: true up deferred revenue and commissions under ASC 606, clean up receivables and accruals, prepare W-2s and 1099s (now only for contractors paid $2,000 or more), reconcile the cap table and check the 409A date, collect R&D costs by project for Section 174A and Section G of Form 6765, review capitalized software, reconcile every bank and card account to December 31, then hand the numbers to the board and lock the 2027 budget. Start in early December; the first hard deadline is February 1, 2027.
Download the checklist (.xlsx): every item below with columns for owner, due date, done and notes. No email needed.
The monthly routine underneath it, day by day, is in our month-end close checklist. This list is for a US Delaware C-corp on a calendar year that sells subscriptions, uses accrual accounting and has a bookkeeper or a fractional controller. If you are on cash-basis books, the revenue and accrual sections are still what an investor or auditor will ask for. The filing dates the close feeds are in our startup tax calendar for 2027.
When to do what
- Early December: send W-9 requests, check the 409A date, agree the year-end plan with your bookkeeper, start the 2027 budget.
- Before December 31: chase overdue invoices, make any grants or payments you want in 2026, record ISO exercises and stock transfers, file 83(b) elections within 30 days of each transfer.
- January 1 to 15: close December, reconcile banks and cards, book accruals and deferred revenue.
- By February 1, 2027: W-2s, Forms 1099-NEC, Forms 3921, the Q4 Form 941 and Form 940 (IRS Pub. 509 (2027) draft).
- By March 1, 2027: the Delaware annual report and franchise tax, which need your issued shares and year-end gross assets (Delaware Division of Corporations).
- By April 15, 2027: Form 1120 or an extension, with the R&D credit form and Section G data.
The checklist
1. Revenue and deferred revenue (ASC 606)
- Tie billing to the ledger. Total 2026 invoices in Stripe or your billing tool should equal revenue recognized plus the change in deferred revenue; find and explain the gap.
- Roll forward deferred revenue. Opening balance plus billings minus revenue recognized equals closing balance, by customer for annual and multi-year contracts. See deferred revenue.
- Review every new contract with unusual terms. Setup fees, multi-year prepayments, free months, usage tiers and custom work can each change when revenue is recognized. See SaaS revenue recognition.
- Capitalize and amortize sales commissions. Under ASC 340-40, incremental costs of winning a contract are an asset expensed over the customer's expected life, so a December deal does not hit December's P&L all at once.
- True up prepaid credits and breakage. Unused prepaid usage credits sit in deferred revenue until used or expired. See credit-based pricing and revenue recognition.
- Reconcile ARR to GAAP revenue. Board decks quote ARR; the tax return and investors' financial statements use GAAP revenue. Write down why they differ.
- Review refunds, credit notes and disputes. Reverse revenue for credits issued and make sure chargebacks are not sitting in an expense account.
- Check sales tax collected against what was filed. Look at where you have nexus going into 2027; SaaS taxability differs by state.
2. Accounts receivable and collections
- Age receivables and chase anything past 60 days before December 31. Cash collected in December lengthens your runway; cash collected in March does not help this year's numbers. See accounts receivable.
- Write off what will not be paid, or book an allowance. Uncollectible invoices overstate both revenue and assets.
- Reconcile Stripe payouts to the bank. Gross charges minus fees, refunds and disputes should equal deposits; clear the clearing account to zero.
- Separate failed card payments from real receivables. A failed renewal in dunning is a churn risk, not an invoice to send to collections.
3. Accounts payable and accruals
- Accrue December costs billed in January. Cloud hosting, AI model usage, contractors, legal and accounting fees all belong in December. See AI COGS and gross margin for usage costs.
- Accrue unpaid bonuses and commissions earned in 2026. If they are earned this year, they are this year's expense even if paid in 2027.
- Amortize prepaid expenses. Annual software subscriptions, insurance and conference deposits paid upfront should be spread over the months they cover.
- Classify costs between COGS and operating expenses. Hosting, third-party APIs and customer support go to cost of revenue; that classification decides your gross margin.
- Clear old open bills and vendor credits. Stale payables make the balance sheet and cash forecast wrong.
4. Payroll and 1099 prep
- Collect a Form W-9 from every US contractor paid in 2026. You need their legal name and tax ID before February 1.
- List contractors paid $2,000 or more in 2026. That is the new Form 1099-NEC threshold, up from $600; the IRS instructions say it "may be adjusted for inflation beginning in calendar year 2027" (Instructions for Forms 1099-MISC and 1099-NEC, Rev. December 2026). Gross proceeds paid to an attorney, such as a settlement paid through a lawyer, stay reportable from $600.
- Collect a Form W-8BEN from non-US contractors instead of a W-9. Keep it on file with the contract.
- Confirm that your payroll provider will file the W-2s, Form 941 and Form 940. Check employee addresses and every state where someone worked in 2026.
- Reconcile the payroll register to the ledger. Gross wages, employer taxes and benefits by month should match what is booked.
- List 2026 incentive stock option exercises. Each needs a Form 3921 to the employee by February 1, 2027.
- Check that you file 1099s electronically if you have 10 or more information returns in total. That is the IRS e-file threshold.
5. Cap table and 409A
- Reconcile the cap table to signed board consents. Every grant, exercise, cancellation, SAFE and conversion in 2026 should have a document behind it.
- Check the date of your 409A valuation. An independent appraisal supports the presumption only if it is no more than 12 months old at the grant and nothing material has happened since, such as a priced round. See our 409A provider comparison.
- Book stock-based compensation expense for 2026 grants. Investors and auditors expect it in the GAAP P&L even though it is not cash.
- Confirm that 83(b) elections were filed for restricted stock issued in 2026. The deadline is 30 days after each transfer (26 U.S.C. § 83(b)(2)) and it cannot be filed late.
- Record issued shares at December 31. Delaware's Assumed Par Value Capital method uses issued shares and total gross assets, which usually gives a far lower tax than the default notice. See the Delaware annual report guide.
- Record total gross assets at December 31 and at each share issuance. The same balance sheet figure decides the QSBS gross-assets test, $75 million for stock issued after July 4, 2025. See QSBS for SaaS founders.
6. R&D costs: Section 174A and Form 6765 Section G
- Total 2026 research and development costs. Engineering and product salaries, contractors, and cloud used for development. Domestic R&D is deductible again under Section 174A. See Section 174A R&D expensing.
- Split R&D between US and foreign work. Foreign research is still amortized over 15 years, so an offshore team changes your tax.
- Map research spending to business components. For tax years beginning after 2025, Section G of Form 6765 asks for spending by product, feature or process, covering at least 80% of qualified research expenses and up to 50 components (Form 6765 instructions, Rev. December 2025).
- Check whether a Section G exception applies. You are exempt if you are a qualified small business taking the payroll tax credit (gross receipts under $5 million and none before the last five years), or if your qualified research expenses are $1.5 million or less, average gross receipts for the prior three years are $50 million or less and you claim on an original return.
- Keep the evidence now. Tickets, sprint records, time allocations and project lists written in 2026 are far easier to defend than ones rebuilt in April.
- Decide on the payroll tax credit with your provider. A qualified small business can apply up to $500,000 of the credit against payroll taxes instead of income tax it does not yet owe.
7. Fixed assets and capitalized software
- Update the fixed asset register. Add laptops and equipment bought in 2026, remove what was lost or sold, and book depreciation.
- Review capitalized internal-use software. Under current GAAP (ASC 350-40), only costs in the application development stage are capitalized; start amortization for features that went live. See capex in software development.
- Decide whether to adopt ASU 2025-06 early. It removes the project stages; it is required for annual periods beginning after December 15, 2027 and early adoption is allowed, so the choice belongs in your 2027 plan. See ASU 2025-06 for SaaS.
- Keep book and tax treatment apart. What you capitalize for GAAP and what you deduct under Section 174A are different calculations; your CPA needs both.
8. Bank, card and treasury reconciliations
- Reconcile every bank account, money market or treasury account and card to the December 31 statement. No exceptions, including dormant accounts.
- Record interest and fund income. Yield on idle cash is taxable income and will arrive on a 1099-INT or 1099-DIV.
- Clear uncategorized and suspense accounts to zero. Attach receipts for card spend over your policy limit.
- Agree intercompany balances. If you have a foreign subsidiary, both sides should show the same balance and the transfer-pricing charge should be booked.
- Confirm loan and venture debt balances with the lender. Book accrued interest and check covenant reporting dates.
9. Board and investor reporting
- Produce the year-end P&L, balance sheet and cash flow statement. These are the basis for the tax return, the Delaware filing and investor reporting.
- Compare 2026 actuals to the 2026 budget. Explain the big variances in revenue, hiring and burn. See budget vs actual variance analysis.
- Update core SaaS metrics from the closed books. ARR, net revenue retention, gross margin, burn multiple and runway; the ARR waterfall calculator builds the bridge.
- Check your investor rights agreement for the annual financials deadline. Some require reviewed or audited statements within a set number of days of year end.
- Book an audit or review early if a lender or investor requires one. Ask early so the work is scheduled before your investor deadline.
10. The 2027 budget
- Finish and approve the 2027 operating plan. Revenue targets, hiring plan and spend by department. See annual operating plan.
- Put 2027 tax and compliance payments in the cash forecast. Delaware on March 1, estimated tax if you will owe, payroll taxes, and the quarter when an R&D payroll tax credit starts reducing payroll taxes. Dates are in the startup tax calendar 2027.
- Rebuild the headcount plan from actual December payroll. See SaaS headcount planning.
- Set a monthly close date for 2027. A close that finishes by the 10th of each month makes next year's year-end a short job. The month-end close checklist lays it out by business day.
Who does what
At seed stage a bookkeeper or bookkeeping firm usually handles sections 1 to 3 and 8, the payroll provider files section 4, your lawyer or cap table provider covers section 5, an R&D credit specialist or CPA handles section 6, and the founder or CFO owns 9 and 10. The download has an owner column so you can assign each line. If you are choosing a bookkeeper, our startup bookkeeping cost comparison shows what each stage pays.
FAQ
What is a year-end close checklist?
A list of the accounting tasks needed to finish the books for the full year, so the numbers can be used for the tax return, investor reporting and next year's budget. It covers everything in a month-end close plus annual items such as 1099s, depreciation, the cap table reconciliation and the R&D cost study.
How long does a year-end close take for a startup?
It depends on how clean the monthly closes were. If December is the only month that was not reconciled, a few weeks in January. If the year was never reconciled, budget for a catch-up project before year-end work starts. Either way the payroll and 1099 items have to be done by February 1, 2027.
What are the year-end accounting entries a SaaS company needs?
The common ones are the deferred revenue true-up, capitalized commission amortization, accruals for December costs and bonuses, prepaid expense amortization, depreciation, stock-based compensation expense, bad debt write-offs and interest income on cash balances.
Do I still need to send 1099s for contractors paid under $2,000?
No, not Form 1099-NEC for payments made in 2026. The threshold rose from $600 to $2,000. Gross proceeds of $600 or more paid to an attorney (a settlement paid through a lawyer, for example) are still reportable on Form 1099-MISC, and you should still collect a W-9 from every contractor.
Is there a year-end closing checklist in Excel?
Yes, the Adlega year-end close checklist is a free .xlsx with area, task, owner, due date, done and notes columns. No sign-up needed.
Rules and thresholds from the IRS form instructions and Publication 509 (2027, early-release draft), the Delaware Division of Corporations and 26 U.S.C. § 83, read on October 22, 2026. This checklist is general information, not tax, legal or accounting advice. Your CPA decides how each item applies to your company.
Once the books are closed, the 2027 plan is the next job. Load your actuals into Adlega and build the forecast from them.