Preparing for 2026: Q4 Accounting Practices That Set the Stage for Success

As we close out 2025, small businesses and nonprofit organizations have more to think about than simply finalizing the books. The fourth quarter is the time to take a step back, look at the bigger picture, and prepare your organization for what comes next. The decisions made now often determine how confidently you will enter 2026.

I have seen it many times. Organizations that use this period with purpose start the new year not just ready but ahead. Their records are accurate, their forecasts are realistic, and their leadership teams know exactly where they stand. Q4 can feel like a scramble, but when approached with structure and intention, it becomes one of the most valuable stretches of the year.

Start with a Comprehensive Financial Review

The best way to prepare for the new year is to understand where you stand right now. That begins with a detailed review of your financial statements, including the balance sheet, income statement, cash flow statement, and, for nonprofits, the statement of functional expenses.

Think of this as your organization’s annual checkup. You are not just reconciling accounts; you are diagnosing your financial health. Every discrepancy you find now is one less surprise in the new year.

Action Steps:

• Verify that all 2025 transactions are accurately recorded and categorized.

• Reconcile bank accounts, credit cards, loans, and lines of credit.

• For nonprofits, confirm that all grants and donations are properly documented and allocated.

A complete review provides clarity and gives leadership the confidence to make informed decisions based on accurate information rather than assumptions.

Evaluate Budget Performance and Build Smarter Forecasts

By the time December arrives, your budget from January likely looks very different from reality. Revenue changes, unexpected costs, and shifts in priorities can alter the financial landscape. That is why Q4 is the ideal time to review your performance, identify variances, and use those insights to guide your 2026 forecasts.

The goal is not to adjust your 2025 budget, as that would alter the baseline you are measuring against. Instead, focus on understanding what worked, what did not, and how those lessons can shape future planning.

Forecasting provides an opportunity to test different outcomes and prepare for a range of scenarios. It allows you to think strategically and anticipate challenges before they arise.

Action Steps:

• Compare actual results against your 2025 budget to identify key variances.

• Revisit assumptions and document what proved accurate or unrealistic.

• Develop 2026 forecasts under multiple scenarios to remain flexible and prepared.

When forecasting is used as a planning tool rather than a formality, it becomes one of the most valuable resources for long-term stability and growth.

Organize and Strengthen Your Financial Records

Strong recordkeeping supports every other part of your accounting process. Organized financial data saves time, improves accuracy, and provides leaders with immediate access to the information they need to make decisions. Q4 is the time to review, clean, and structure your records so that you begin 2026 on solid footing.

Action Steps:

• File and organize receipts, invoices, contracts, and bank statements systematically.

• Confirm payroll, benefits, and employee records are accurate and complete.

• Review and reconcile your balance sheet, income statement, and expense reports.

• Identify and resolve any unrecorded revenue or outstanding liabilities.

Accurate and organized records allow your team to focus on strategy rather than catching up on administrative work once the new year begins.

Revisit Key Performance Indicators

Key performance indicators (KPIs) are a vital tool for measuring success and identifying areas for improvement. The end of the year is the ideal time to determine which metrics provide meaningful insight and which may need to be refined.

For small businesses, important KPIs may include cash flow, net profit margin, or accounts receivable turnover. Nonprofits often focus on program efficiency, fundraising effectiveness, or administrative cost ratios. The goal is to track what truly matters and use that information to drive better decisions.

Action Steps:

• Evaluate each KPI against 2025 goals to identify strengths and weaknesses.

• Decide which indicators should continue into 2026 and which should be revised.

• Set measurable targets for the upcoming year that align with your mission and objectives.

  
  

Tracking the right metrics gives your organization early awareness of trends and opportunities for improvement, which leads to more effective decision-making.

Plan Ahead with Purpose

Once your financial review is complete and your performance has been analyzed, use those insights to guide your strategy for 2026. This planning period should focus on turning data into direction. Whether that means preparing for new initiatives, reevaluating resource allocations, or identifying cost-saving measures, Q4 provides the best moment to plan for the year ahead.

Action Steps:

• Develop financial projections that reflect your organization’s strategic goals.

• Allocate resources to areas that provide the greatest impact or return.

• Identify opportunities for both growth and efficiency.

Strategic planning gives your organization the clarity to move forward with purpose, not just momentum.

Final Thoughts

Closing out 2025 is more than completing year-end tasks. Thoughtful Q4 planning provides insight and direction, helping organizations start 2026 with a stronger foundation. Year-end is not the finish line, but instead it’s the launch point for continued success.

Donnelly-Boland’s accounting team can help you enter the new year with clarity and confidence. From financial reviews to KPI analysis and strategic forecasting, our experts provide the guidance your business or nonprofit needs to make informed decisions and position itself for growth.