Navigating the 2025 GovCon Year-End Close: Key Focus Areas & Our Free Checklist
For many government contractors, year-end can feel like a pile of deadlines, reconciliations, and loose ends that all demand attention at once. But it does not have to turn into a late-night scramble. When you focus early on a few core areas, you can close the year with clean numbers and walk into January feeling in control.
This guide keeps things easy. It breaks year end close into a few doable steps you can knock out without the scramble, so you can wrap up 2025 cleanly and start 2026 on solid ground.
Key Areas of Focus for Year-End Planning
1) Year-End Close and Reconciliations
If year-end close had a motto, it would be: trust the reconciliations.
Before you worry about reports and planning, make sure the basics are solid:
- Cash accounts tie to bank statements
- Credit cards match what was actually spent
- Clearing/suspense/undeposited funds accounts don’t have “mystery balances”
- Balance sheet accounts make sense (not just “it’s always been there”)
A clean reconciliation process is what makes everything else easier, especially when questions come up in January.
Year End Close Checklist
To assist you, we’ve created a free Year-End Close Checklist to help you stay organized and complete year-end activities with confidence.
2) Indirect Rates Reconciliation (and a reality check)
For GovCons, indirect rates aren’t just an accounting concept they affect:
- Pricing and proposals
- Profitability
- Funding burn
- And, for cost-type work, the ability to support what you billed
Year-end is the right time to:
- Review what drove your rates up or down in 2025
- Confirm direct vs. indirect cost treatment is consistent
- Sanity-check whether your current structure still fits how you operate
The goal isn’t perfection, it’s defensible, explainable, and aligned with how you actually run the business.
3) 1099 & W-2 Processing (make it a mini-project, not a surprise)
Payroll year-end goes smoother when it’s treated like a short project with a deadline, not something you squeeze in later.
Helpful checks:
- Vendor data is complete and accurate (especially W-9 info for 1099s)
- Payroll registers tie to your general ledger
- Bonus/commission/benefit entries are accounted for properly
- Subcontractor vs. employee decisions haven’t drifted into a gray area
Your future self will appreciate having this organized before January hits.
4) Leave Balances Reconciliation
Leave balances can look small… until they aren’t.
At year-end, it’s worth confirming:
- Leave balances match your source of truth (HR/timekeeping/payroll)
- Carryover rules are applied correctly
- Leave liability is reflected appropriately
This is one of those items that’s easy to ignore and annoying to untangle later, so closing it out cleanly is a win.
5) Time & Expense Year-End Close
In GovCon, timekeeping and expense details are not “admin work.” They’re core compliance building blocks.
Before year-end:
- Confirm all timecards are submitted and approved
- Validate charge codes and job/task charging
- Review any unusual corrections or late entries
- Spot-check expenses for documentation and correct classification
If you ever need to defend costs, this area will matter, so it’s worth getting it right while it’s fresh.
6) Budgeting and Projections for 2026
You don’t need a perfect budget. You need a useful one.
A practical 2026 plan usually includes:
- Expected labor (by contract/program, not just totals)
- Your best view of backlog and pipeline timing
- Key cost changes you already know are coming (benefits, tools, insurance, facilities, hiring)
- A quick “what if” scenario: what happens if revenue shifts or labor mix changes?
Budgeting at year-end turns 2026 into a plan, not a guess.
7) Compliance and Year-End Reporting (what to keep in mind going into 2026)
Year-end is a great moment to confirm your compliance posture especially if you’re growing, changing contract mix, or taking on more complex work.
Two timely reminders for many GovCons:
- If you have cost-type work, incurred cost submissions are due within six months after your fiscal year-end (per FAR 52.216-7).
- Cyber requirements are becoming a bigger operational and budgeting factor: the DoD’s CMMC final rule was published Sept 10, 2025 and takes effect Nov 10, 2025, with a phased rollout across contracts.
Even if compliance is handled by operations or IT, the financial impact shows up in rates, pricing, and budgets, so finance should have a seat at that table.
8) Systems, Process, and Training (system-agnostic, but still important)
This isn’t about any specific platform, it’s about reducing friction.
A quick way to capture improvement opportunities:
- What did we scramble to find this year (reports, approvals, support, documentation)?
- Where did we rely on “one person who knows everything”?
- What tasks were repeated manually that could be standardized?
Pick 2–3 improvements for early 2026. Small changes here can make next year’s close dramatically smoother.
Final thoughts
Year-end close is more than a box to check, it’s one of the few times you get to actively improve how your business runs. When you take the time to close 2025 cleanly, you’re not just producing financials. You’re building a foundation you’ll lean on all through 2026: faster reporting, smoother billing, clearer rates, and fewer “surprise” fire drills that pull your team off mission work.
When your books are clean and your assumptions are documented, everything gets easier - billing, reporting, planning, and explaining the story behind the numbers. That’s how you wrap up 2025 with clarity and head into 2026 with momentum.
If you want support getting there, Iuvo Systems works alongside GovCon teams to steady the close process, from reconciliations and payroll coordination to project accounting and reporting, so you can close confidently and start strong.
How Iuvo Can Help
At Iuvo Systems, we’re here to help you navigate year-end complexities with ease. Whether it’s reconciling accounts, processing payroll, or planning for the year ahead, our experts are ready to assist.
Our services include:
- Year-end close and reconciliations
- Indirect rates reconciliation (building new rate structures for new year)
- 1099 & W-2 processing and closing out payroll year
- Leave balances reconciliation and closing out leave year
- Time & expense year-end close
- Incurred cost submission assistance
- Prepare budgets/projections for the next year
- Compliance and year-end reporting
- System consulting, support and training
Let’s make 2026 your best year yet!
We’re here to help you navigate year-end complexities with ease; our experts are ready to assist.
Explore our full services.
Iuvo means “to help and to support” in Latin. True to our mission of being a trusted partner in the success of government contractors.
About Iuvo:
Iuvo Systems is a certified 8(a) and Minority Business Enterprise (MBE) small business with over 16 years of experience specializing in outsourced accounting & financial services, data analytics & reporting, enterprise system solutions, and GovCon staffing solutions for government contractors and agencies. Iuvo Systems provides expertise in all aspects of Government Contracting, DCAA, FAR, and CAS. We are headquartered in Washington DC metro area with an office in Atlanta, GA. We proudly serve clients across the nation and extend our expertise to support operations outside the continental United States (OCONUS).