A Simple Month-End Close Checklist for Small Businesses

A month-end close is a routine you repeat after each month to make sure your books are complete and correct. It takes less time when you do it every month than when you wait until tax season. This checklist is a practical routine, not an IRS requirement.

The checklist

1. Record everything. Enter all sales, bills, and payments from the month. Check that each has a receipt or invoice behind it.
2. Reconcile your bank accounts. Match your books to the bank statement. The ending balances should agree. If they do not, find the difference before moving on.
3. Reconcile your credit cards. Do the same for every business card.
4. Clear the “uncategorized” list. Every transaction should have a category. Ask yourself if each one is really a business expense.
5. Review money owed to you. List unpaid customer invoices and follow up on late ones.
6. Review bills you owe. List unpaid bills so nothing surprises you next month.
7. Check owner activity. Record owner draws and contributions as such. They are not income or expenses. See separating business and personal money.
8. Read your reports. Look at the profit and loss statement and the balance sheet. Ask whether the numbers make sense. A big swing is a reason to look closer.

Then save and back up

Save a copy of the reports and the reconciled statements. Keep the supporting records for as long as the IRS says you need them. IRS Publication 583 explains that records supporting your income, deductions, and credits must be kept. See what to scan and keep.

Quarterly and yearly add-ons

• Each quarter: check your estimated tax payments and payroll filings if you have employees.
• At year end: review contractor payments to see whether you owe any Forms 1099, and gather what your preparer needs.

Need help with a backlog? Book a call with FlowTex.

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Sources

• IRS: Publication 583, Starting a Business and Keeping Records

This article is general information, not tax or accounting advice. The checklist is a suggested routine and is not an IRS requirement.