Whether you’re a contract auctioneer or running your own auction house, closing out your books at year’s end can feel overwhelming. With consignors, buyers, online platforms, fees, commissions, sales tax, and expenses, it’s easy to miss something crucial. But a thorough year-end close ensures compliance, accurate taxes, and a strong start for the new year.
Here’s a step-by-step guide to help you wrap up your auction business with confidence.
1. Gather Your Materials
Before you crunch any numbers, collect these essentials:
- Bookkeeping software reports (QuickBooks, Wave, Xero, etc.)
- Auction platform reports (HiBid, Proxibid, AuctionTime, LiveAuctioneers, Auction Mobility, etc)
- Bank and credit card statements
- Cash and check receipts logs
- Payroll records (if applicable)
- 1099-NEC/1099-K forms from marketplaces
- Consignor contracts and settlement sheets
- Buyer invoices and receipts
- Expense receipts
2. Review All Auction Sales
For Auction Houses/Galleries:
- Make sure every auction is fully closed.
- Confirm all items have recorded hammer prices, sales tax (or exemptions), paid invoices, and consignor settlements.
For Contract Auctioneers:
- Ensure all event invoices are accounted for.
- Confirm payments for call fees, mileage, buyer’s premium (if shared), and clerk services.
- Record any unpaid invoices as Accounts Receivable.
3. Reconcile Bank Accounts & Credit Cards
Reconciliation is a must for audit protection:
- Reconcile business checking, escrow/consignor settlement accounts, credit cards, and payment processors (Stripe, Square, PayPal, Venmo).
- Look for duplicate transactions, missing deposits, mismatched settlement balances, and uncashed checks.
4. Sales Tax Review & Compliance
Don’t let sales tax slip through the cracks:
- Reconcile sales tax collected by month.
- Ensure sales tax was remitted for each jurisdiction.
- Check exemptions (farm use, resale, dealer licenses) and keep supporting documents.
- Summarize total taxable sales, exempt sales, and sales tax remitted.
5. Consignor Accounting & Settlement
- Confirm all consignor settlements were paid.
- Identify unpaid or stale-dated settlements.
- Match payouts to settlement sheets.
- Generate payout ledgers, consignment fee reports, and inventory reports.
6. Buyer Invoice Audit
- Ensure all buyer invoices are paid.
- Verify shipping or freight charges are recorded.
- Reconcile unpaid invoices or chargebacks.
- Document refunds or credit memos.
- Generate sales, unpaid invoice, and tax-exempt buyer reports.
7. Expense Review & Categorization
Don’t miss deductible expenses:
- Review venue rentals, advertising, software fees, surcharges, marketing, staff payments, mileage, depreciation, security, cleaning, storage, photography, legal, and accounting fees.
- Generate profit & loss statements, expense details, mileage logs, and depreciation schedules.
8. Payroll & Contractor Checklist
If You Have Employees:
- Reconcile payroll reports.
- Ensure employer taxes are paid.
- Generate W-2s and W-3s.
- Confirm payroll liabilities are zero.
If You Use Contractors:
- Issue 1099-NEC forms for anyone paid $600+.
- Reconcile contractor ledger.
- Verify W-9s for all contractors.
9. Inventory Audit (Auction Houses Only)
- Conduct a physical inventory count.
- Remove sold items from records.
- Verify unsold items are returned or scheduled for future auctions.
- Check inventory value for tax/insurance.
- Generate inventory and valuation reports.
10. Final Financial Reports for Tax Prep
Prepare these for your CPA or tax preparer:
- Profit & Loss (accrual and cash basis)
- Balance Sheet
- Statement of Cash Flows
- Sales & income documentation
- Sales tax summaries
- Consignor payout summaries
- Payroll documentation (W-2s, 1099s, tax filings)
- Mileage logs, depreciation schedules, asset summaries
- Marketplace 1099 forms and payment processor summaries
11. Year-End Cleanup & Archive
- Back up your digital books.
- Export PDF copies of all essential financials.
- Archive auction files (contracts, photos, settlement sheets, invoices).
- Update your Standard Operating Procedures.
- Review insurance coverage based on revenue growth.
12. Planning for Next Year
- Review business metrics: Which auctions were most profitable? Which consignors or platforms performed best? What expenses can be reduced?
- Set up next year’s books: Reset numbering, create recurring transactions, update mileage log templates, prepare a marketing calendar, and schedule major events.
Year-End Auction Close Checklist
Accounting
- Bank reconciliations
- Credit card reconciliations
- Sales tax summary
- Profit & Loss, Balance Sheet, Cash Flow
Consignor
- Settlement reconciliation
- Inventory reconciliation
Buyers
- Unpaid invoice list
- Refunds reconciled
- Tax-exempt documentation
Expenses
- Categorical review
- Depreciation schedule updated
- Mileage logged
Payroll
- W-2s and 1099s
- Payroll reconciliation
Reports to CPA
- All financial statements
- All 1099s
- Sales tax documents
- Marketplace platform summaries
A thorough year-end close isn’t just about compliance—it’s about setting your auction business up for success in the year ahead. Happy closing!
DISCLAIMER
I am not a tax professional, accountant, or attorney. This guide is provided solely for informational purposes and reflects general best practices for year-end organization within an auction business. It does not constitute tax, legal, or financial advice. Readers should consult with a qualified tax professional or legal advisor for guidance tailored to their specific business needs and compliance requirements.
*Photo by Tara Winstead: https://www.pexels.com/photo/sticky-notes-and-plastic-numbers-on-table-7111517/
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