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Accounting and bookkeeping

Small Business Accounting Checklist: 33 Things to Do and When to Do Them

Don't let managing your business finances scare you - it's not rocket science! Our handy small business accounting checklist will show you the ropes and keep you on top of your money matters. Plus, with our recommended timeline, tax season will be a breeze. Say goodbye to scrambling through receipts and hello to organised, up-to-date financial reports. You'll be running your business like a boss in no time!

Read through for in-depth coverage of your required tasks for each reporting period.

Daily Accounting Checklist

1. Check Cash Position

Since cash is the fuel for your business, you never want to run on empty. Start your day by checking how much cash you have on hand and knowing how much you expect to receive and pay during the upcoming week/month.

Weekly Accounting Checklist

2. Record Transactions

Record each transaction (billing customers, receiving cash from customers, paying suppliers, etc.) in the proper account daily or weekly, depending on volume. Although you can use Excel tips, tricks and templates to record transactions manually, it is more convenient and reliable to use small business accounting software like QuickBooks.

If you’re still manually entering data into spreadsheets, see how QuickBooks compares to spreadsheets like Microsoft Excel and Google Sheets. Learn about the differences between QuickBooks and spreadsheets when it comes to small business accounting.

3. Document and File Receipts

Keep copies of all invoices sent, all cash receipts (cash, cheque and credit card deposits), and all cash payments (cash, cheque, credit card statements, etc.). 

Start a suppliers file and sorted alphabetically (Staples under “S”, Costco under “C,”etc.) for easy access. A common habit is to toss all paper receipts into a box and try to decipher them at tax time, but unless you have a small volume of transactions, it’s better to have separate files for assorted receipts kept organised as they come in. Many accounting software systems let you scan paper receipts and avoid physical files altogether.

4. Review Unpaid Bills From Suppliers

Every business should have an “unpaid suppliers” folder. Keep a record of each of your suppliers that includes billing dates, amounts due and payment due dates. If suppliers offer discounts for early payment, you may want to take advantage of that if you have the cash available.

5. Pay Suppliers, Sign Checks

Track your accounts payable and have funds earmarked to pay your suppliers on time to avoid any late fees and maintain favourable relationships with them. If you are able to extend payment dates to net 60 or net 90, all the better. Whether you make payments online or drop a check in the mail, keep copies of invoices sent and received using invoicing software like QuickBooks.

6. Prepare and Send Invoices

Be sure to include payment terms. Most invoices are due within 30 days, noted as “Net 30” at the bottom of your invoice. Without a due date, you will have more trouble forecasting revenue for the month. To make sure you get paid on time, always use an invoice template that contains the right details such as payment terms, itemised charges, and your payment address.

Read more about the anatomy of an invoice and how to get paid on time.

7. Review Projected Cash Flow

Managing your cash flow is critical, especially in the first year of your business. Forecasting how much cash you will need in the coming weeks/months will help you reserve enough money to pay bills, including your employees and suppliers. Plus, you can make more informed business decisions about how to spend it.

All you need is a simple cash flow statement showing your current cash position, expected cash receipts during the next week/month and expected cash payments during the next week/month. Download a free cash flow statement template from QuickBooks today!

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Monthly Accounting Checklist

8. Balance Your Business Chequebook

In the same way that you balance your personal checking account, it is important to ensure the accuracy of your monthly cash transactions in order to have an accurate understanding of your cash position. By reconciling your cash, you can easily identify and fix any mistakes or oversights made by either yourself or the bank, allowing for timely corrections.

9. Review Past-Due (“Aged”) Receivables

Be sure to include an “ageing” column to separate “open invoices” with the number of days a bill is past due. This gives you a quick view of outstanding customer payments. The beginning of the month is a good time to send out overdue reminder statements to customers, clients, and anyone else who owes you money.

At the end of your financial year, you will be looking at this account again to determine what receivables you will need to send to collections or write off for a deduction.

10. Analyse Inventory Status

If you have inventory, set aside time to reorder products that sell quickly and identify others that are moving slowly, have been marked down, or even written off. By checking regularly (and comparing to prior months’ numbers), it’s easier to make adjustments so you are neither short nor overstocked. Using inventory management software can also help you automate your inventory tracking with low-stock alerts.

11. Process or Review Payroll and Approve Tax Payments

While you have an established schedule to pay your employees (usually monthly), you need to meet payroll tax requirements based on laws at different times, so be sure to withhold, report, and deposit the applicable taxes to the appropriate agencies on the required dates.

Review the payroll summary before payments are disbursed to avoid having to make corrections during the next payroll period. By utilising the services of a payroll provider, you can save time and guarantee precision for a reasonable price. Additionally, our complimentary paycheque calculator is available for you to determine the necessary deductions from each paycheque.

12. Review Actual Profit and Loss vs. Budget and vs. Prior Years

Your profit and loss statement (P&L statement, also known as an income statement), both for the current month and year to date, tells you how much you earned and how much you spent. Measure it against your budget every month (or quarter). Comparing your actual numbers to your planned numbers highlights where you may be spending too much or not enough, so that you can make changes.

If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period year-to-date P&L to identify variances and make adjustments.

Download a free income statement template from QuickBooks.

13. Review Month-End Balance Sheet vs. Prior Period

By comparing your balance sheet at one date—June 30, 2022, for example—to a balance sheet from an earlier date (December 31, 2021), you get a picture of how you are managing assets and liabilities. The key is to look for what is significantly up and/or down and understand why. For example, if your accounts receivable are up, is it due to increased recent sales or because of slower payments from customers?

Download a free customisable balance sheet template from QuickBooks.

Month-End Close Checklist

14. Reconcile accounts

Ensure that all bank accounts, credit cards, and other financial accounts are reconciled. You can do this automatically using QuickBooks Online. Performing bank reconciliation at the end of every month helps you identify any discrepancies between your records and the actual transactions in and out of your accounts.

15. Review general ledger

Take a close look at your general ledger to verify that all your small business transactions are accurately recorded in the correct accounts. This helps you identify any errors or discrepancies in your books. Download a free general ledger template from QuickBooks.

16. Adjust journal entries

Once you’ve performed bank reconciliation and adjusted your reviewed your general ledger, you should make the necessary adjustments to your journal entries to correct any errors or discrepancies you find during your review. You should look to adjust your accruals, prepayments, or depreciation.

17. Close revenue and expense accounts

To help ensure the accuracy of financial statements for a specific month, we recommend temporarily halting any new entries in revenue and expense accounts from the previous month. This will help reflect the true performance of the business during that time period.

18. Review accruals and deferrals

In order to gain a comprehensive understanding of your small business's monthly performance, it is important to examine your accruals and deferrals. It is essential to carefully review any modifications made and ensure they are properly recorded and calculated. 

19. Perform depreciation calculations

Calculating depreciation is an essential task for keeping your business records accurate and financially sound. When your business possesses assets like equipment or machinery that lose value over time, it's important to determine and document the depreciation on a monthly basis.

This process is extremely important because it ensures that the balance sheet accurately reflects the current value of your assets. By spreading out the cost of these assets over their useful life, you avoid overestimating their worth on the balance sheet.

Accounting Monthly Close Checklist

20. Reconcile Bank Statements

Every month, it is important to reconcile your bank statements in your routine accounting tasks. This means ensuring that the transactions recorded in your records match the actual transactions in your bank account. If any differences are found, they should be immediately resolved and rectified.

This practice is essential for maintaining accuracy in your financial reports and ensuring that future tasks are based on reliable data. Checking your bank statements also promotes transparency and accountability.

21. Review Accounts Receivable

Reviewing your accounts receivable involves checking for any overdue payments and sending reminder statements to clients who have outstanding balances. Doing so helps businesses effectively manage their financial health by ensuring that payments are made on time. Not only does this process address late payments, but it also allows you to identify any patterns or clients who consistently delay their payments.

Managing accounts receivable goes beyond just the financial aspect—it also fosters positive relationships with clients through clear communication about payment expectations. Taking this proactive approach ultimately supports financial stability and client satisfaction, ensuring a healthy cash flow for your business.

22. Verify Accounts Payable

Checking accounts payable is a vital task that you need to perform every month. It's all about making sure the financial records are accurate and stable. This means carefully going through all the bills and invoices to make sure they match up with what's in the accounting system. 

It also involves making payments on time to avoid any late fees and maintaining good relationships with suppliers. The whole point of this process is to manage cash flow effectively and prevent any potential disruptions. Ultimately, verifying accounts payable is a proactive way to make sure our financial records are reliable, payments are made promptly, and our business stays financially healthy.

Quarterly Accounting Checklist

23. Prepare/Review Revised Annual P&L Estimate

It’s time to evaluate how much money you are actually making by determining 

  • whether your net assets are going up or down
  • the difference between revenues and expenses
  • what caused those changes
  • how you are spending profits
  • Whether you need to make adjustments to improve sales and margins

24. Review Quarterly Payroll Reports and Make Payments

You have been reviewing your semi-monthly payroll reports. However, it depends if the county requires quarterly payroll reports and any remaining quarterly payments. Again, it’s best if your payroll service provider completes these reports and files them. Your job is to review to make sure they appear reasonable.

25. Review Sales Tax and Make Quarterly Payments

If your company operates in a state that requires sales tax, make sure you comply to avoid serious penalties.

26. Compute Estimated Income Tax and Make Payment

States that have income taxes require you to pay estimated income taxes. Review your year-to-date P&L to see if you owe any estimated taxes for that quarter. Your tax accountant can assist if necessary.

Annual Accounting Checklist

27. Review Past-Due Receivables

Now it’s time to check significant past-due receivables and decide whether you think customers will eventually pay, whether to send past-due bills to a collection agency, or whether to write them off for a deduction.

28. Review Your Inventory

Review your current inventory to determine the value of items not sold. Any write-down of inventory translates to a deduction on your year-end taxes. If you do not write down unsellable inventory, you are overstating your inventory balance and paying additional taxes that you don’t owe. Download a free inventory template from QuickBooks.

29. Review and Approve Full-Year Financial Reports and Tax Returns

At tax time, carefully review your company’s full-year financial reports before giving them to your accountant. Before you sign your return, be sure to review it for accuracy based on your full-year financial reports. If the auditor finds any underpayment of taxes, it will come to you, not your accountant, for any additional taxes, penalties and interest.

Year-End Accounting Checklist

30. Review Financial Statements

As the year draws to a close, it is important to review your financial statements for the year so far. These statements include the income statement, balance sheet and cash flow statement. The income statement shows trends in profitability, while the balance sheet assesses financial stability. 

Looking at your cash flow statement can give you some really useful information about how you handle your cash. It helps you make smart decisions and sets you up for a great year by helping you plan your finances ahead.

31. Assess Inventory Levels

Reviewing inventory levels is a vital aspect of year-end accounting. It involves thoroughly examining your existing stock to match your recorded and actual quantities. Conducting physical counts guarantees that your inventory system is always accurate. 

It’s crucial to assess the market value of your inventory and make necessary adjustments based on both physical counts and market conditions. This procedure not only resolves any discrepancies but also ensures accurate financial reporting, which in turn helps with strategic decision-making for the upcoming year.

32. Evaluate Business Performance

At the end of the year, it's important to evaluate how your business has performed by comparing what you actually achieved with your initial goals and targets. Take a deep dive into financial metrics, operational milestones, and customer satisfaction to gain valuable insights into the effectiveness of your strategies and the accuracy of your forecasts. 

These insights will serve as a solid foundation for planning strategically in the upcoming year.

33. Documentation and Record-Keeping

Keeping your finances in check means keeping your paperwork in order. It's crucial to hold onto your receipts, bills, and contracts and make sure they're safe. By organising your receipts, you can easily keep track of your spending, and sorting your bills helps with paying them on time. And most importantly, make sure those contracts are locked up tight to follow the law. 

It is important to arrange your tax documents, bank statements, and financial reports in order to guarantee the accuracy of your records. Safely storing these documents, whether physically or digitally, safeguards sensitive financial information and guarantees confidentiality and adherence to regulations. 

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Managing your business finances can feel far too complex, especially if you’re doing everything manually. Accounting software for small businesses like QuickBooks can help you manage your accounts so you’re prepared for filing on tax day. Generate financial reports and get a solid overview of your accounts with QuickBooks Online today. For more guidance, see our guide to financial reporting. To keep a handy reference of this checklist, save our infographic below.