Monthly Bookkeeping Checklist

Small business owners who recently opened their doors may feel inexperienced with the operational tasks involving bookkeeping. Quickly, they understand that running a company involves more than selling products or services, growing your client base, and increasing revenue. For those inexperienced with accounting duties, we are here to help. Below, we discuss the basics of creating a monthly bookkeeping checklist tailored to your business by exploring eight of the most important accounting tasks.

Review, Pay, and Record Invoice Payments: The Customer and The Vendor

Without having this initial step thoroughly checked for accuracy and completion, you risk making mistakes in subsequent monthly bookkeeping tasks.

Customer Invoices

Just as you record any invoices sent to the client, document all customer payments as soon as the payment is received. This should take place before completing bank reconciliations and reviewing bank credit card accounts. Doing so prevents you from mistakenly contacting the client for a presumable past due or losing track of your recorded payments received.

Vendor Invoices

While staying current with customer invoices is crucial, reviewing your own invoices with vendors is equally imperative. Therefore, regularly review all vendor invoices and accounts to ensure that you are up-to-date on all payments. Additionally, always inspect your incoming bills, making sure you received what you paid for. If everything appears normal, make the payment accordingly and file it as an outgoing expense.

Complete Bank Reconciliations for Bank and Credit Card Accounts

Before moving on to anything else, you need to review the accuracy of your business cash and credit transactions in order to work with your exact cash position. To do so, reconcile your bank accounts and credit cards at the close of each month, helping you easily find and amend any mistakes. This can be done by reviewing your statements to flag any suspicious credits, debits, canceled transactions, or double charges. Once you have thoroughly examined your monthly bank and credit statements and are confident in its accuracy, you can complete the rest of your monthly bookkeeping tasks.

Calculate, Collect, and File Sales Tax

Calculating and filing sales tax in a timely manner is of utmost importance. Your business is responsible for the calculation, collection, and payment of sales tax if you reside in one of the 45 participating states. Though you need to make quarterly sales tax payments, calculating and filing the sales tax on a monthly basis helps make the quarterly payment process less inundating. Keep in mind that in addition to state sales tax, your county, city, or even district may hold its own sales tax requirements.

Furthermore, failing to collect sales tax from a client could be to your detriment. As a seller, if you fail to collect and/or pay a sales tax, the tax authorities will assess penalties and interest if they determine an amount unpaid. They can ultimately take assets or put liens on them, which negatively impacts your credit.

Review Open Deposit Reports

Once you calculate and file your sales tax, begin focusing on any open deposit reports. The two main deposit reports pertain to vendors and clients.

Open Vendor Deposit Report

This report is crucial when reviewing vendor deposits on project, inventory purchase orders that have not yet been applied to a vendor invoice, and deposits that have been partially used on vendor invoices. The Open Vendor Deposit Report needs to ensure that orders are properly filled by the vendor. Most importantly, by reviewing this, you need to accurately record your COGS and provide an accurate net income at the end of the year.

Open Client Deposit Report

The Open Client Deposit report reveals any proposal or retainer deposits received from a client yet to be applied on a client invoice. Additionally, this report shows any client invoices that used a portion of that original deposit or retainer, helping track what the funds applied to. Review this report to confirm your invoicing generates in a timely manner and monitor the proper distribution and application of the client’s funds.

Review Aged Accounts Reports

After reconciling your bank and credit statements, turn your attention to Age Accounts Reports. These reports split between accounts payable and accounts receivable.

Aged Accounts Payable Report

Reviewing this report helps ensure that the bills you entered throughout the month are accurate and paid in a timely manner. By doing so, you protect your credit and business reputation. During this time of review, remove and replace any incorrect transactions or additional figures to accurately reflect your company’s net income and current liabilities.

Aged Accounts Receivable Report

Similar to Accounts Payable Reports helping monitor the status of your bills, Aged Accounts Receivable Reports track if your clients are paying in a timely manner. Additionally, this report alerts you of any invoicing errors, like duplicate invoices, providing you the opportunity to handle the inconsistency and prevent overstating your revenue.

Send Statement for Current and Past Due Invoices

Prepare and Send Invoices

Staying up to date with sending invoices helps both your business and your customers. While sending invoices in a quick fashion reminds clients of your services, this also promotes quicker payment. While maintaining a scheduled flow of preparing and sending them, keep the status of any outstanding invoices. This can be done with the use of spreadsheets or an accounting software. As soon as you send billing statements and invoices to customers, make a record of it where you can easily assess the status of customers’ payment positions. Doing so helps prevent duplicate and forgotten invoices. If you notice a past due, send the client a friendly reminder to submit payment.

Review Work in Process (WIP) Report

Reviewing the Work in Process report ensures that you are invoicing your clients for any merchandise you already purchased. This report shows any overlooked additional charges, such as freight, shipping, or reimbursables, that should be invoiced to the client.

Review Your Payroll Reports

Though each company reviews and completes payroll differently, one thing remains consistent throughout every process: reviewing the totals on the Payroll Reports from your payroll company to check that the numbers match your payroll accounts. Since your payroll company already provides detailed reports, you only need to file the journal entries of the totals for each payroll account.

Review Financial Reports

Compare Monthly Income Statement to Prior Month, Prior Year, and Budget

Reviewing your Income Statement, or Profit and Loss Statement, at the end of each month reveals what your business earned and spent. After doing such, compare the results of this month to other months in addition to year-to-date. If you prepare a budget for your business each year, compare the statement against your budget.

Balance Sheet and Fund Balances

Reviewing your Balance Sheet at the close of each month and comparing it to the previous month offers insight into how you manage your assets and liabilities. While doing so, search for any abnormal changes and investigate if anything notably increased or decreased. For example, if your Accounts Receivable appears higher than normal, assess the explanation. Is it a result of increased sales that month, or have your clients been slower in remitting payment?

Review Forecasted Cash Flow

As a small business owner, it is important to understand your cash flow goals. If you have yet to establish any, consider creating weekly, monthly, and annual cash flow projections. Though you set a goal, remind yourself to monitor it weekly and adjust where necessary to keep the goal tangible. As a result, you can maintain an immediate and holistic view of your cash flow goals.

For seasonal businesses, this is especially crucial. By reviewing your forecasted cash flow for the month, quarter, or even the year, you can prepare ahead of time for the months in which activity decreases. As a result, your business will plan to save the excess earnings from busier months during the height of your business to offset any financial shortcomings of your off-season. Failing to do so could cause a great rift in your finances.

Let the Experts Help

Bookkeeping doesn’t have to be complicated. If you need help with weekly, monthly, or annual bookkeeping tasks, we are here to help. At Remote Quality Bookkeeping, we provide cost-effective, efficient, and accurate bookkeeping services for small businesses and franchisees throughout the United States.

If you have any further questions, do not hesitate to reach out at (866) 567-4258 or via our online contact form!