Bookkeeping is easiest when it is a small monthly habit instead of a year-end emergency. This checklist covers what every small business should do each month to keep its books accurate and ready for tax time.
1. Record and categorize every transaction
Make sure every bank and credit card transaction is in your bookkeeping software and coded to the right account. Keep business and personal spending in separate accounts. It is the single best way to keep records clean.
2. Reconcile your bank and credit card accounts
Compare your books with each statement and confirm the ending balances match. Reconciling catches duplicate entries, missing transactions, and bank errors while they are still easy to fix.
3. Review what customers owe you
Look at your accounts receivable aging report. Follow up on overdue invoices, and record payments as they arrive.
4. Review what you owe
Check your bills and accounts payable so vendors are paid on time and nothing is paid twice.
5. Keep receipts and records
Save receipts and invoices digitally and attach them to transactions where your software allows. Good records support your deductions if the IRS ever asks.
6. Track contractor payments
Record payments to each contractor and keep their W-9 on file. It makes year-end 1099 filing quick.
7. Review your financial statements
Read your profit and loss statement and balance sheet each month. Look for unusual changes, and compare with last month and the same month last year.
8. Set aside money for taxes
If you pay quarterly estimated taxes, move money for them each month so the payment is ready when it is due.
When to get help
If you are more than a month or two behind, or bookkeeping is taking time away from running your business, outsourcing can pay for itself. Our bookkeeping services handle the monthly close for you, and our accounting services add CPA-led review and reporting.
This article is general information, not tax or accounting advice for your specific situation.