As a small business owner, you may find yourself struggling to keep up with your business’s books. As soon as you know it, another month has passed and you’ve fallen behind recording transactions. Sure, closing your books can be stressful and time-consuming. But if you have a monthly closing process and checklist in place, you’ll be finishing accounting tasks and reconciling accounts in no time. Here is a month-end close checklist for your help.
When closing your books monthly, you need to record the funds you received during the month. Some incoming cash you might need to record includes:
Chances are, you probably don’t have time to record transactions every day. If this is the case, make sure you write down your purchases and organize receipts. That way, you can keep your accounts payable in tip-top shape for your monthly close.
During your month-end close process, you need to reconcile all of your accounts. To do this, match your records to your account statements from outside entries, such as the bank. Make sure your records for the month are accurate by performing a bank statement reconciliation.
Record all of the receipts for items you purchased using petty cash. Make sure your receipts and records match the balance of your petty cash fund. If it does not, chances are you are missing a transaction. To compare your petty cash fund to your records, physically count the leftover cash in your fund.
our fixed assets are long-term items that add value to your business. Things like buildings, equipment, furniture, vehicles, and land are considered fixed assets. Your fixed assets usually do not convert directly into cash.
If you want to make sure your inventory is correct, you need to perform monthly inventory counts. Counting your inventory monthly allows you to accurately record inventory levels in your books at month-end. Plus, doing a monthly inventory count can help you decide what items you need to replenish and how frequently.
At month-end close, you have the responsibility of organizing and reviewing all of your financial statements. These mainly include your:
Business balance sheet
Profit and loss statement
At month-end close, review your revenue and expense accounts to confirm they are accurate. Check to see if you recorded your expenses in the correct accounts for the period. Be sure that accruals and prepaid expenses are recorded accurately in your books.
Before you completely close the accounts at month-end, consider having a second set of eyes review your work. The person reviewing your accounting information could be a manager or supervisor who has experience handling your books.
To keep on top of your monthly accounting responsibilities and cut down on time spent closing your books, create a monthly financial calendar. Your calendar can help you prepare for closing your books for the next month. And, your calendar can help you avoid falling behind on your books.