Last month I talked all about creating weekly tasks to keep up with your books. We helped create a routine making it easier at month’s end. Now that the month has ended, it’s time to make sure your business books are all clean. Let’s review your monthly business bookkeeping tasks. You got this!
Monthly Business Bookkeeping
Closing your books every month is essential. I call this your monthly business bookkeeping. If you’ve been working on them weekly, then this task should be pretty quick and easy. It’s important to keep on top of this so everything is clean as you moved forward. You shouldn’t have to go back and edit prior months if you keep up with your monthly business bookkeeping.
When you’re running a small business, quick and easy sounds excellent, right?
Since you only do this task 12 times a year it’s not as frequent as others and you might forget what needs to be done especially in the beginning. That’s why I’ve provided a handy checklist to go along with this post. Plus, it will get easier as you go along.
It’s okay if you feel lost to start. Let’s go through this together.
5 steps simple steps for monthly business bookkeeping
1. Complete Your Weekly Tasks
This step should be easy at this point because you’ve been doing it weekly. If you haven’t been doing that, check it out here. Go through these steps to make sure all transactions are in your books through the end of the month.
If you’ve been doing this weekly, you most likely have most of this complete and this step should be simple and easy.
If you’ve had a crazy busy week, no worries. Add those weekly transactions now. Take the time and get it done right. Don’t skip this step or your monthly books will not be correct.
You should do it now while it’s still somewhat fresh in your mind. Remember, it’s way easier to remember what happened last week than it is to remember what happened 3 months ago or last year!
2. Reconcile all bank and credit card accounts
I consider this the most important step to monthly business bookkeeping. Why?
Because it double checks that all the transactions are there and accounted for. Plus, you’ll make sure all the amounts are accurate. This helps you not miss any important deductions. We all like write-offs, right?
You’ll need your bank or credit card statement for the month. I suggest you download these from your bank every month and keep them in a separate folder somewhere that’s backed up (cloud is great for this).
You’ll grab the ending amount from the statement and enter it into Quickbooks. To get started go to your bank account in Quickbooks Online. In the top right corner, there will be a button to “Reconcile”. Click it. 
Make sure the right account shows in the dropbox box and then enter the ending balance and ending date from your statement. You’re ready to “start reconciling.”
You’ll need to do this for every account that has a monthly statement. This includes checking, savings, credit cards, PayPal, etc.
If you’ve kept up with your weekly bookkeeping, then this step should be a breeze, and simply be double-checking your work over the past few weeks.
If you missed something during your weekly bookkeeping, then this will catch those errors. No worries. This is the time to clean all the up and fix any mistakes. Hopefully, there won’t be any at all but inevitably there’ll be something.
Please don’t skip this step. It’s super important to make sure your books are clean.
Make sure to check for errors in transfers between accounts (think credit card payments or transfers to savings) and also to make sure any owner draws are categorized properly.
If you write physical checks, this step will make sure those are all in there correctly.
3. Calculate sales tax
If your business doesn’t collect sales tax, then you’re ready to move on to the next step. Woohoo!
If your business is required to file and remit sales tax reports, this is the time to do it. It’s on your mind, you know your numbers and you’re already working on the books.
You may be required to do this monthly, quarterly, annually or possibly not at all. All those options are ok. Just make sure to adjust your frequency accordingly.
Once your books are reconciled, you’ll have your sales or income number. Calculate what you owe, if any. Log in to the state system, file, and pay. Make sure to keep records of any payments and filings just in case.
Now you can check that box. Done.
4. Review financial reports
Another very important step to your monthly business bookkeeping is to review reports. Once everything is entered and reconciled, you can see the financial health of your business.
It’s nice to track this monthly to see what’s working and any growth. This can also tell you what’s not working which is equally important. If you notice a trend, it’s time to take action. Maybe something is going better than you thought. It could be time to market that item better. Alternatively, something might not be selling like you thought it would. Now’s the time to work on a plan to adjust that. Either it’s time to remove it from your offerings or work on a better marketing plan to get it to sell.
Review the following reports monthly:
- Profit and loss
- Balance sheet
- Accounts payable AND receivable aging (if any)
These are the most popular reports to review. You might find others, such as the statement of cash flow, helpful.
Stay tuned for how to review and read these reports. For now, I suggest saving or starring them in Quickbooks so they are easily accessible. Feel free to take a gander at what they tell you. You can change the dates, view month by month or quarter by quarter. You can even compare year to year to see how your business is growing.
I love numbers so I find these reports fascinating. I realize not everyone will share my enthusiasm but they are still powerful and you should still be glancing at them.
5. Lock it down
Next up locking it down!
To officially close your books for the month, you can lock them or close the books as many finance people say.
You’ve gotten this far and done all that work. The last thing you want or need is to make some change that throws everything off balance, right?!!?
Trust me. One change can cascade into hours of work finding the problem. Been there.
You can prevent this super easily by locking the month down.
Watch this quick video to see how to close your books:
While this sounds final, you will still be able to make changes by either providing a password or clicking yes to a warning.
You’re all set.
Go grab that glass of wine, indulge in some Netflix, grab a bite of chocolate. Whatever you want to reward yourself for getting to this point!
To recap the 5 simple steps for monthly business bookkeeping are:
- Complete your weekly tasks
- Reconcile all account
- Pay sales tax
- Run and review financial reports
- Lock the month in Quickbooks down
Remember, the more you do this, the easier it gets. It should also start to make sense to you and help you grow your business or make the necessary changes to help it grow and focus on the items that are making you money.
These are the basic steps. Some businesses might be more complicated and need more time or have more steps involved. Remember, if you dread this monthly task and have the revenue to support it, then it’s time to outsource.
Don’t forget to keep the checklist handy. It should help you move right along.
I’m confident you can do this!
