You might find it difficult to stay on top of your company’s books as a small business owner. Without warning, another month has passed, and you are now behind in recording transactions.
It’s true that closing your books can be time- and stress-consuming. Yet, if you have a monthly closure procedure and checklist in place, you’ll quickly accomplish your bookkeeping work and reconcile your accounts. If you keep a checklist to make sure that everything that has to be done has been done, the process can be made simpler. But what exactly is covered by this list? What must you keep an eye on? We’ve got your back, so don’t worry!
Here is a brief monthly bookkeeping checklist to help you stay on top of your finances.
- Revisit the Cash Position
- Updating your Accounting Program
- Record Sales and Expenditures
- Review Customer and Vendor Invoices
- Reconcile Your Records
- Sales Tax Returns
- Review Your Inventory
- Record Credit Cards Transactions
- Review Debt Accounts
- Review WIP Reports
Revisit the Cash Position
Keeping track of cash flow is a crucial part of effective bookkeeping. A cash flow statement shows how money flows in and out of your business over a period of time, and it provides valuable information about your business’s liquidity and ability to meet financial obligations. By reviewing your cash position at the end of each month, you can ensure that you have enough cash on hand to pay bills and make other necessary expenditures. This will also help you identify any potential cash flow problems early on, so that you can take proactive steps to address them. Overall, maintaining accurate and up-to-date cash flow records is essential for the long-term success of any business.
Updating your Accounting Program
Choosing the right bookkeeping software can make all the difference in how efficiently and effectively you are able to manage your business finances. Regularly checking and updating your bookkeeping software is important to ensure that it is operating correctly and providing you with accurate information. You should always ensure that you are using the latest version of your software, and that it is aligned with your current bookkeeping needs. If your current software is not meeting your needs, it may be time to upgrade or switch to a different program altogether. By staying on top of your bookkeeping software, you can avoid errors, save time, and ensure that your financial records are always accurate and up to date.
Record Sales and Expenditures
When you track your expenses, you can identify areas where you may be overspending and find ways to cut costs. This can help you improve your bottom line and increase your profitability. Similarly, when you track your revenue, you can identify trends and opportunities for growth, and develop strategies to increase sales and revenue. Overall, recording your revenue and expenses on a regular basis is essential for effective bookkeeping and financial management. It can help you stay on top of your business’s finances, make informed decisions, and ultimately, achieve your financial goals.
Review Customer and Vendor Invoices
Managing invoices is indeed an important part of finance management for businesses. Invoices are a crucial document that serves as proof of the transaction between the business and its customers or vendors. In addition to their legal significance, invoices also provide valuable financial information to businesses. By keeping track of invoices, business owners can monitor their cash flow and expenses. This information can help businesses to make informed decisions about their financial strategies, such as when to make purchases, when to negotiate with vendors, or when to offer discounts to customers. Additionally, by tracking invoices, businesses can ensure that they are receiving payments on time and that they are paying their vendors in a timely manner.
Reconcile Your Records
By reconciling the bank statement with the company’s accounting records, businesses can identify and correct any errors or discrepancies in their financial records. This helps to ensure the accuracy of the financial statements and reduces the risk of fraud or misuse related to business finance. Bank reconciliation statements are an important tool for businesses to ensure the accuracy of their financial records and reduce the risk of fraud or misuse related to business finance. By reconciling the bank statement on a monthly basis, businesses can stay up to date with their financial activities and identify any issues or concerns in a timely manner. This helps to promote efficiency in the recording of transactions and ensures precise books.
Sales Tax Returns
Recording and preparing sales tax on a monthly basis can provide several benefits for businesses. First, it can help to ensure that sales tax is accurately recorded and collected. By keeping up-to-date records, businesses can identify any discrepancies or errors in their sales tax calculations and correct them in a timely manner. This can help to reduce the risk of penalties or fines for non-compliance with tax regulations. Preparing sales tax monthly can help businesses to manage their cash flow more effectively. By setting aside the appropriate amount of sales tax each month, businesses can avoid the risk of having to pay a large lump sum at the end of the quarter or year. This can help to improve financial planning and reduce the risk of cash flow problems.
Review Your Inventory
Regular review of inventory levels is important because it helps businesses to identify and address potential issues such as overstocking or stock shortages. Overstocking can tie up valuable resources and lead to increased storage costs, while stock shortages can result in lost sales and damage to customer relationships. Regular inventory reviews can also help businesses to identify trends in customer demand and adjust their inventory levels accordingly. In summary, as a business owner, it is essential to review your firm’s inventory regularly to ensure that you have the right amount of stock available to meet customer demand while minimizing inventory costs.
Record Credit Cards Transactions
Separating personal and business transactions helps maintain accurate records of business activities and prevents any confusion or inaccuracies in financial reporting. By keeping business and personal transactions separate, it becomes easier to track and reconcile business expenses, prepare tax returns, and analyze financial performance. Mixing personal and business expenses can also complicate the process of claiming business deductions on tax returns, which can result in penalties and interest charges. To record credit card transactions separately, businesses can create a separate credit card account solely for business expenses. This way, all business transactions made with the credit card can be tracked and reconciled separately from personal expenses. Businesses can also keep receipts and invoices for all credit card transactions and categorize them based on their business purpose.
Review Debt Accounts
Regularly reviewing accounts payable and receivable reports is essential for managing a business’s finances effectively. It helps business owners stay informed about their current financial status and enables them to make informed decisions about managing their cash flow. By reviewing accounts payable reports, business owners can ensure that they are aware of any outstanding bills or payments that need to be made. This helps them to prioritize their spending and avoid late payment penalties. Additionally, by reviewing accounts receivable reports, business owners can keep track of any outstanding payments owed to them by their customers. This helps them to follow up on overdue payments and take appropriate action to collect the funds owed.
Review WIP Reports
WIP is an important concept in business and refers to unfinished tasks or projects that are still in progress. WIP can include goods that are partially completed, services that are in the process of being delivered, or projects that are underway but have not yet been completed. It is essential for businesses to regularly review their WIP to ensure that they are on track to meet their goals and objectives. By regularly reviewing WIP, business owners can identify any bottlenecks or issues that may be preventing the completion of tasks or projects and take corrective action to ensure that they are completed on time. Reviewing WIP on a monthly basis is a good practice to help businesses stay on track and ensure that they are meeting their targets. By reviewing incomplete tasks from the previous month, businesses can prioritize them for the upcoming month and work towards completing them. This can help businesses stay organized and ensure that they are progressing towards their goals.
The Monthly Bookkeeping Checklist ends here. We hope you find these steps useful and try to execute them the best you can. Every business has its own way of functioning, but these are some common methods that everyone can adopt. We hope you use these to ease your workload. Happy Bookkeeping!