A year in review for bookkeeping clients is a one-page comparison of this year against last, covering five or six numbers that moved, the cause behind each change and three decisions the client should make for next year. You present it in a thirty-minute meeting after the year is closed and reconciled, and before the tax preparer starts.
Which numbers belong in a client year in review?
The numbers that belong in a client year in review are the few that changed enough to matter and that the client can act on: revenue, the two or three largest cost lines, net profit and year-end cash. Each one appears next to last year's figure. Everything else stays in the full reports, which the client already has.
Choosing the lines is most of the work. A useful filter has three tests:
- Did it move? A cost line that rose 2 percent with inflation is not news. One that rose 25 percent is.
- Is it large? A doubled bank fee from 120.00 to 240.00 is real but minor. Lead with the lines that carry the money.
- Can the client act on it? Rent fixed by a five-year lease changed nothing they can decide this year. Materials pricing or staffing can.
Always include net profit and year-end cash together, even if one barely moved. Clients often expect them to rise and fall in step, and the gap between them is one of the most useful things the review can explain.
Use the same accounts both years. If you reorganized the chart of accounts during the year, restate last year's figures into the new structure before comparing, or the review will show changes that are only relabelling.
Lines to leave out
Leave out percentages of percentages, ratios the client has never used and any line you cannot explain in one sentence. A review that shows twenty lines tells the client nothing in particular. Six lines, each with a clear story, tell them where the year went.
Explaining what drove each change in the year in review
Explaining what drove each change means pairing every number in the year in review with one concrete cause from the books: a new contract, a price rise, a hire, a vehicle. The cause comes from the transactions themselves, not from a guess, so you can point to the customer, vendor or entry behind it if the client asks.
Find each driver by working down from the total:
- Split the change by account. Revenue up 58,000 might be two accounts, such as maintenance contracts and installs.
- Split by vendor or customer. Within the account that moved most, sort transactions by payee and compare years.
- Look for timing. A new expense that starts in April, or a customer that stops in August, often explains most of a change.
- Separate price from volume. Materials up 26 percent may be more jobs, higher prices or both. Check a few recurring purchases for unit price.
Write each driver in the client's language. "Two new commercial maintenance contracts from March" is clear. "Increase in recurring service revenue" makes them translate it back.
Some changes will need the client's own knowledge. If a cost jumped and the books do not show why, ask before the meeting. Questions that come up while you prepare the review belong on that month's ask my accountant list, so the client answers them together rather than in the meeting.
When a driver needs a short lesson in reading the statements, such as why buying a truck did not reduce profit by the full price, the walkthrough in how to explain financial statements to clients covers the profit and loss, balance sheet and cash in plain words.
A sample year in review for a small landscaping client
The table below is an example year in review for an example client, a landscaping business with two crews. The figures are made up for illustration. Other overhead such as insurance and rent is not shown, which is why the lines do not add to profit.
| Line | Last year | This year | Change | What drove it |
|---|---|---|---|---|
| Revenue | 410,000 | 468,000 | +58,000 | Two commercial maintenance contracts from March |
| Plants and materials | 96,000 | 121,000 | +25,000 | More installs, plus higher nursery prices from spring |
| Crew wages and contractors | 168,000 | 196,000 | +28,000 | Third crew member hired in April |
| Fuel and vehicles | 31,000 | 38,500 | +7,500 | Second truck added in May |
| Net profit | 62,000 | 59,000 | -3,000 | Cost growth slightly ahead of revenue growth |
| Cash at year end | 24,000 | 41,000 | +17,000 | Profit kept in the business, truck financed rather than paid in cash, December deposits for spring installs |
Read down that table and the story of the year is clear. The business grew by about 14 percent, but materials and labor grew faster, so profit slipped a little. Cash rose anyway, and only part of that came from profit: the truck was financed rather than paid for in cash, and customers paid deposits in December for work not yet done.
That last row is where many clients get confused, and it is where the method of keeping the books matters. Whether those December deposits count as this year's revenue or next year's depends on whether the books are kept on a cash or accrual basis. Cash vs accrual for small business taxes explains the difference and why it changes the year-end picture.
Three decisions for next year from the year in review
Three decisions for next year turn the year in review from a report into a plan. Each one comes straight from a line in the table, is phrased as a choice the client can make, and has a number attached. Three is enough to discuss properly in one meeting. More than that and none of them gets decided.
For a landscaping client with the figures in that sample, the three decisions might be:
- Raise install prices. Materials rose about 26 percent while revenue rose about 14 percent. "Do we raise install prices by 8 percent from March, or absorb the cost and accept lower margin?"
- Keep the third crew member year-round or seasonally. Wages rose 28,000. "Do we keep the new hire on through winter, or move to a March-to-November schedule?"
- Set a winter cash floor. Year-end cash includes deposits that spring installs will use up, and the new truck loan now takes a monthly payment. "What balance do we hold back each November so January to March is covered?"
Write each decision with the evidence beside it and leave the choice to the client. Your job is to frame it clearly, not to make it. If the client wants advice on pricing or hiring, that may be a separate, paid conversation rather than part of the bookkeeping fee.
Record the decisions in the follow-up email. Next year's review then opens by checking what happened to each one, which gives the meeting continuity and shows the client the review led somewhere.
Running the year in review meeting in thirty minutes
The year in review meeting runs in thirty minutes when the client gets the one-page summary a day ahead and the meeting follows a fixed order: numbers for ten minutes, causes for ten, decisions for ten. The full reports stay in the background. You bring them up only if the client asks about a specific line.
A simple agenda:
- Minutes 0 to 10: the numbers. Walk down the table. Say each change in one sentence and pause for questions.
- Minutes 10 to 20: the causes. Take the two or three biggest changes and show what drove them, with a transaction or two as evidence.
- Minutes 20 to 30: the decisions. Present the three choices and agree who decides each one and by when.
Prepare the year's work well before the meeting. Every month should be reconciled, every open question answered and every suspense line cleared. A review built on books with unexplained items invites doubts about every number in it.
Afterward, send a short email within a day: the one-page summary, the three decisions as agreed and any follow-up you promised. Keep the meeting itself to the summary; the monthly reports carry the detail the rest of the year.
When thirty minutes is not enough
Clients with several entities, a big change such as a new location, or a loss-making year may need longer. Split it into two meetings instead of stretching one. A thirty-minute review followed by a separate planning session keeps each conversation focused.
What should a year in review leave to the tax preparer?
A year in review should leave tax questions to the tax preparer: estimated tax due, deductions, depreciation choices, entity elections and anything about what the client will owe. The review covers what happened in the business. The tax return covers how that is taxed, and the client should hear that from the person preparing it.
The line can blur. A client who sees profit of 59,000 will ask what tax they owe on it. Say plainly that their preparer will work that out, and offer to send the preparer the reconciled books the same week. The same goes for the truck: the review can show its purchase and the loan, but how it is depreciated is the preparer's decision.
Where the two overlap, the review helps the preparer. Share the summary with them, with the client's permission, along with the year's reconciled reports. A preparer who can see that part of the cash rise came from advance deposits and a financed truck starts the return with fewer questions.
A clean year starts with clean months. AutoBankConvert converts each client's statements, checks every one against its opening and closing balance, and exports categorized files, so each month behind the review starts from statements that balance.