Ten things to do each month so your books are accurate, your tax return is easier and you know where the business stands.
Bookkeeping is easier in small monthly pieces than in one large catch-up at tax time. Here is a checklist you can follow each month.
Every month
- Record all income. Match every deposit to an invoice or a sale, so nothing is left as an unexplained deposit.
- Categorize all expenses. Assign each transaction to the right category and keep the receipt or invoice.
- Reconcile each bank account and credit card. Compare your books to the statement and clear any difference, one account at a time.
- Review unpaid invoices. Follow up on customers who owe you money, and check what you owe your vendors.
- Record payroll. Make sure wages, payroll taxes and any owner pay are recorded correctly and match your payroll reports.
- Check sales tax. If you collect sales tax, confirm what you collected and what you owe for the period.
- Record owner transactions. Owner draws, contributions and personal expenses paid by the business should be recorded as such, not as business expenses.
- Review your profit and loss statement. Look for numbers that do not make sense: a category that is far higher than usual, or missing income.
- Review your balance sheet. Check cash, loans, and what customers owe you against what you expect.
- Back up and file your records. Keep statements, receipts and reports where you or your accountant can find them.
Things to do each quarter
- Compare estimated tax payments with your year-to-date profit
- Review payroll tax filings
- Look at whether the business structure still fits
Why it matters
Accurate books give you real numbers for decisions, make your tax return faster and cheaper to prepare, and give a lender or partner statements they can rely on. When the books fall months behind, correcting them takes more time than keeping them current would have.
If your books are already behind, start with the oldest month, reconcile forward, and ask for help if it feels like too much. A cleanup is a one-time cost, and monthly bookkeeping stops it from happening again.