Monthly bookkeeping checklist for small businesses

The short answer

Each month, record and categorise every transaction, reconcile every bank and card account to its statement, review what customers owe you and what you owe suppliers, then check the profit and loss and balance sheet before closing the month. Done monthly, this takes hours. Left for a year, it takes weeks.

Through the month

A few small habits make month-end much faster:

• Connect bank and card accounts to your accounting software so transactions arrive automatically.
• Categorise new transactions once a week, while you still remember what they were.
• Save receipts and bills as you go, attached to the transaction where your software allows it.
• Send invoices as soon as the work is done, and record payments when they arrive.

The month-end checklist

1. Every transaction is categorised. No uncategorised income or expenses, and no items left in a suspense account without a note.
2. Bank accounts are reconciled. The closing balance in your books matches the bank statement for the last day of the month.
3. Credit cards and loans are reconciled. The same check against each card and loan statement.
4. Payment processors are reconciled. Stripe, PayPal or Square payouts are matched to the sales and fees behind them.
5. Transfers are not counted twice. Moves between your own accounts are recorded as transfers, not as income or expenses.
6. Customer balances are reviewed. The accounts receivable report shows who owes what. Chase overdue invoices.
7. Supplier balances are reviewed. The accounts payable report matches the bills you have actually received and not yet paid.
8. Receipts are attached. Larger expenses have supporting documents your accountant can find.
9. Payroll and tax entries are recorded. If payroll or sales tax is handled elsewhere, the resulting figures are entered as your accountant expects.
10. Unusual items are noted. Anything you were unsure how to categorise is listed for your accountant rather than guessed.

Reading the reports

Once the checklist is done, run two reports for the month and compare them with the previous month:

A large, unexplained change between months usually means a miscategorised transaction, a missing statement or a duplicated entry. Fix it before closing.

Closing the month in QuickBooks Online

QuickBooks Online lets you lock a period so transactions on or before a date cannot be changed by accident. A primary or company admin can turn it on under Settings → Account and settings → Advanced → Accounting → Close the books, then choose a closing date.

You can set the lock to show a warning before any change, or to require a password. Intuit recommends reviewing accounts, entering outstanding invoices, expenses and payments, and reconciling accounts through the lock date before you set it. Move the closing date forward each month once the checklist is complete.

What to leave to your accountant

• Tax returns, tax planning and any filings with tax authorities.
• Year-end adjustments such as depreciation and accruals, unless they have asked you to make them.
• Decisions about how unusual transactions should be treated.

Give your accountant access to your accounting software, or send the reports in the format they ask for. Clean monthly books usually make their work quicker.