Year-end checklist for small engine repair shops

It's December 28. The shop is quiet. You've got three tickets open, two units in storage, and a stack of mail on the counter that's been there since Thanksgiving. The accountant wants books closed by the third week of January. Last year you scrambled in February and it cost you two full Saturdays and a missed $2,100 in warranty labor you forgot to file.

This year, run this small engine shop year end checklist and be done before Super Bowl weekend.

Why a year-end checklist matters

Three reasons, in order of how much they cost shops that skip them.

• Unclaimed warranty labor. OEMs give you a window, often 30 to 90 days, to file claims. Anything from Q4 that isn't in by late January usually gets denied. Shops lose thousands here.
• Inventory write-downs. Parts that sat all year are worth less than you paid. Counting them correctly lowers your tax bill.
• 1099 deadlines. Contract labor payments of $600 or more require a 1099-NEC by January 31. Miss it and the IRS penalty is $60 per form and climbs from there.

Do the checklist and none of these surprise you.

Before December 31

These items have to happen this calendar year. They involve physical counts or actions that only matter if dated in the old year.

1. Count physical inventory. Every part, every bin. Two people, one reads, one writes. Reconcile to the software. Log the count date. This is the number that goes on your tax return.
2. Identify obsolete parts. Anything that hasn't moved in 18 months. Write it down at scrap value or zero. Talk to your accountant about write-down versus write-off.
3. Reconcile the register and the card terminal. Every day in December should match. If there's a variance from earlier in the year, find it now, not in March.
4. Collect W-9s from any contractor you paid $600 or more. Mobile techs, bookkeepers, IT people, sign contractors. No W-9, no 1099, IRS problem.
5. Run a customer aging report. Accounts over 90 days past due. Call them before year end. Collect what you can. Write off what you can't.
6. Close out winter storage contracts that are current. Confirm every unit on premises has a signed contract and a current-month payment.
7. Update your mileage log if you use a personal vehicle for pickups, parts runs, or customer visits. IRS requires contemporaneous records.
8. Buy any deductible equipment you were planning to buy anyway. Shop equipment purchased and placed in service by December 31 can qualify for Section 179 expensing. Talk to your accountant about the current-year limit.

A note on the physical count. Do it when the shop is closed. Two hours with a tech costs you $80 in labor and saves you five times that in tax exposure and shrinkage discovery.

First week of January

Now the books transition. These items are all reconciliation and recovery.

1. Bank reconciliation. Every account, through December 31. Match every transaction. Flag anything that doesn't clear.
2. Card processor reconciliation. Stripe, Square, whatever you use. Download the December statement. Match deposits to ticket payments.
3. Sales tax liability check. Run a report of taxable sales by jurisdiction. Compare to what you remitted during the year. Catch any missed filings.
4. Warranty recovery audit. Pull every warranty ticket from Q4. Cross-check against claims submitted to each OEM. File anything that slipped. This is the one that pays for itself most years.
5. Vendor statement review. Pull year-end statements from Stens, Rotary, Oregon, OEM parts suppliers. Compare to what your books say you owe. Dispute any discrepancy while the year is still fresh.
6. Deposit all uncashed checks sitting in the desk drawer. Old checks from old customers. Anything over 90 days may have to be reissued.
7. Archive the year's tickets. Whatever your software does to move closed tickets into a year-bucket, do it now. Keeps the active view clean.
8. Back up everything. Full export of customer data, tickets, inventory, financial records. Two copies. One cloud, one local drive.

Warranty recovery is the single highest-value item on this list for most shops. An hour of work. Usually between $300 and $2,000 recovered. Do it first.

Before the end of January

The federal filing deadlines start hitting now. These are hard dates.

1. 1099-NEC forms to every contractor paid $600 or more in the prior year. To the contractor by January 31. To the IRS by January 31 (electronic) or February 28 (paper).
2. W-2 forms to every employee by January 31.
3. State and federal unemployment filings for Q4.
4. Federal payroll tax deposit if you're a quarterly depositor. January 31.
5. State payroll returns for Q4.
6. Review your business insurance policy. Most renew on calendar year. Check coverage limits, especially for storage (see below).
7. Confirm storage insurance rider. If you have customer equipment in storage, your general liability usually doesn't cover it. A separate bailee or garage-keepers rider does. Review coverage amounts against the value of equipment currently stored.

February

Tax filings come due, sales tax gets reconciled, and depreciation schedules get finalized.

1. Annual sales tax reconciliation. Most states require an annual reconciliation filing in addition to monthly or quarterly remittances. Due date varies by state, usually by end of January or February.
2. Fixed asset depreciation review. Your accountant handles the schedule, but you should know what's on it and confirm every asset is still in service. Anything sold, scrapped, or destroyed needs to come off.
3. Section 179 paperwork. If you expensed equipment under Section 179, make sure documentation is clean. Receipts, service dates, in-service dates.
4. Vehicle actual expense log finalization if you use actual expenses instead of mileage.
5. Business personal property tax filing for states and counties that assess it. Due date varies.
6. Schedule the accountant meeting for tax return prep. The good accountants book up by the end of February.

Key dates at a glance

Hard deadlines only. State-specific dates vary, check your state.

Date	What's due
December 31	Physical inventory count, equipment purchases for current-year expensing
January 15	Q4 estimated tax payment (sole props, S-corps passing through)
January 31	1099-NEC to contractors, W-2 to employees, Q4 payroll filings
January 31 (electronic)	1099-NEC copies to IRS
Varies (late Jan or Feb)	Annual sales tax reconciliation
February 28	Paper 1099 filing deadline (electronic if 10+ forms)
March 15	S-corp and partnership returns (or extension)
April 15	C-corp and sole prop returns (or extension)

Put these in your calendar in December. Every one of them has a penalty for missing it.

A practical way to work the list

You don't have to do everything in one sitting. Here's how most shops break it up.

• December 29 or 30. Half a day. Inventory count and the Before-Dec-31 list.
• January 3 or 4. Two hours. The first-week-of-January list, starting with warranty recovery.
• January 20. Two hours. 1099s, W-2s, state filings.
• February 10. Two hours. Sales tax reconciliation, depreciation, accountant meeting.

Four sittings, eight or nine hours total, and you're done clean. Shops that don't plan this way usually spend three times that over the winter and still miss things.

Bottom line

A small engine shop year end checklist is not optional if you want to keep your tax bill honest and your warranty dollars recovered. Count inventory before December 31, reconcile in the first week of January, get 1099s out by January 31, and close out sales tax and depreciation by end of February. Block the four half-days on your calendar now and the whole thing takes care of itself.