Year-End Money Checklist for Freelancers and Side Hustles

By Cedar & Ledger

If you work for yourself, the last weeks of December decide how January goes: which invoices get paid this year, whether the money set aside for taxes is enough, and how long it takes to answer your tax preparer. This checklist covers the money side of closing out the year for freelancers, side hustles and one-person businesses. For the bookkeeping side (categories, reconciling, the yearly profit and loss), see Small Business Year-End Bookkeeping Checklist.

Every number below is a made-up example to show the steps, not a benchmark. This is general information, not tax, legal or financial advice. Tax rules depend on your situation, so check the IRS pages named below or ask a tax professional.

Quick checklist

• ☐ Send final invoices and follow up on open ones
• ☐ Total this year's income by client and platform
• ☐ Compare your tax set-aside with what you may owe
• ☐ Note the January 15 estimated payment date
• ☐ Total expenses and business miles, and find the receipts
• ☐ If you paid contractors, get ready for 1099-NEC forms
• ☐ Check each client's profit per hour and set next year's rates
• ☐ Start next year's files, invoice numbers and set-aside

The steps below walk through each one.

Step 1: Send final invoices and follow up on open ones

In the first half of December, invoice every finished job, even small ones. Then list every open invoice with its due date. Many clients pay slowly over the holidays, so a polite reminder in early December has a better chance than one on December 28.

Example (made-up numbers):

How to Follow Up on a Late Invoice (Example Numbers) has wording for the reminder, and How to Track Freelance Invoices So Clients Pay on Time shows a simple invoice log.

Which year a late-December payment counts in depends on your accounting method. Ask a tax professional if you're unsure, then use the same rule every year.

Step 2: Total this year's income by client and platform

Add up what each client and each payment platform paid you this year. Keep the list; you'll use it in January when tax forms arrive. A client may not send you a form for smaller amounts, but you still report all of your business income, form or no form.

Step 3: Compare your tax set-aside with what you may owe

Look at your profit so far (income minus business expenses) and what you've put aside or already paid in estimated taxes.

Example (made-up numbers): the rule this freelancer picked is to set aside 25% of profit. That rule is only an example, not a recommendation; your rate depends on your income, state and deductions.

In this example, moving another $1,050 into the tax account by mid-January closes the gap. How Much to Set Aside for Side Hustle Taxes explains how people pick a starting percentage.

Step 4: Note the January 15 estimated payment date

For people who pay quarterly estimated tax, the fourth payment for 2026 is due January 15, 2027, according to the IRS Form 1040-ES instructions. The same instructions say you can skip that payment if you file your 2026 return by February 1, 2027 and pay the full balance with it. Put the date on your calendar now. Whether you need to make estimated payments at all depends on your situation; IRS Publication 505 or a tax professional can help.

Step 5: Total expenses and business miles, and find the receipts

Add up business expenses for the year and make sure you can find a receipt or statement line for the bigger ones. How to Organize Business Receipts (Simple System) shows one folder per month. If you drive for work, total the business miles from your log; How to Track Car Mileage for Taxes covers what a log usually includes. Check the current IRS mileage rate before using one.

Some people time purchases like equipment before December 31. Don't buy something just for a deduction; a deduction lowers taxable profit, it doesn't give the money back. Ask a tax professional before making year-end moves for tax reasons.

Step 6: If you paid contractors, get ready for 1099-NEC forms

If your business paid another freelancer or contractor, make sure you have their name, address and taxpayer ID (many businesses ask for a Form W-9 before paying). The IRS instructions for Form 1099-NEC say to file one for each person you paid at least $2,000 for services in 2026 (the threshold was $600 in earlier years). The form is due by January 31, or the next business day when that falls on a weekend. January 31, 2027 is a Sunday. Check the IRS instructions or ask a tax professional about your case.

Step 7: Check each client's profit per hour and set next year's rates

Year-end is a good time to see which work actually pays. For each main client, divide what they paid by the hours you spent, including emails and revisions.

Example (made-up numbers): Client A paid $9,600 for 160 hours, which is $60 an hour. Client B paid $4,200 for 105 hours, which is $40 an hour. Client B is the one to raise or replace first.

How to Set Your Freelance Hourly Rate (Example Numbers) and How to Raise Your Freelance Rates (Email Script + Steps) help with the next step. If you're going to raise rates in January, tell current clients in December.

Step 8: Start next year's files, invoice numbers and set-aside

• Save this year's files with the year in the name and start fresh copies for the new year.
• Start next year's invoice numbers, like 2027-001. How to Number Your Invoices (Simple System) explains a simple format.
• Pick next year's tax set-aside percentage and set up an automatic transfer on the days you get paid.
• Put next year's estimated tax dates on your calendar from the new Form 1040-ES.

Common snags

• Waiting for 1099s to know your income. Your own records are what count.
• Spending the tax money in December. Keep it in a separate account you don't use for anything else.
• Chasing invoices on December 30. Send reminders in early December.
• Raising rates without notice. Give clients a few weeks in writing.

A simple way to track it

You can do this in any spreadsheet. If you'd like ready-made ones, the Cedar & Ledger Self-Employed & Small Business Bundle ($29, Excel and Google Sheets, plus one HTML website template) has the sheets this checklist uses: a bookkeeping tracker with a yearly profit and loss, a freelancer invoice and client tracker, a side hustle income tracker with a tax set-aside, a mileage log and pricing, reseller, Etsy fee and rental trackers. If you only need the invoices, the Freelancer Invoice + Client Tracker ($9) logs every invoice as paid, open or overdue (details). Related: Small Business Year-End Bookkeeping Checklist and How Much to Set Aside for Side Hustle Taxes.

Honest note: I make these templates and sell them under Cedar & Ledger, so I'd earn from a purchase. All dollar amounts above are examples only. General information only, not tax, legal or financial advice.

For the Jan 15 payment, Q4 Estimated Tax Payment: January 15, 2027 Checklist has the steps.

Related template: Self-Employed & Small Business Bundle. Also see: Freelancer Invoice + Client Tracker

See all Cedar & Ledger templates

Try the free side hustle tax set-aside calculator →