A month-end close checklist for small businesses

The checklist

1. Reconcile every bank account to the bank statement balance, not just to the bank feed. A feed can miss or duplicate lines; the statement is the evidence.
2. Reconcile every credit card the same way, including cards held by staff.
3. Clear "uncategorised" and "ask my accountant" to zero. Anything left there is a question you'll be asked later, with less memory of the answer.
4. Review money owed to you (the receivables aging report). Chase anything over 30 days, and ask whether anything over 90 days will ever be paid.
5. Enter every supplier bill for the month, even unpaid ones, so your profit reflects costs you've actually incurred.
6. Tie payroll to the payroll provider's report: gross pay, taxes withheld and employer taxes should match your ledger.
7. Tie sales tax collected to the liability in your books before you file.
8. Record loan payments correctly, splitting interest (an expense) from principal (which reduces the loan).
9. Keep owner money separate. Personal spending on the business card goes to owner draws, not to expenses.
10. Compare this month's profit and loss with last month's. Any line that moved more than you can explain is usually a posting error.
11. Lock the month. Set the closing date in QuickBooks or the lock date in Xero so nothing can be posted into a closed period without you knowing.
12. Save the evidence: statements, reconciliation reports and any large invoices, in one folder per month.

What an auditor looks at first

When an auditor opens a company's books, they start with the bank reconciliations, then anything posted into a period after it was closed, then large or round-number journal entries near year end. If your reconciliations are done monthly and your closed months are locked, most of the hard questions have already been answered.

Still choosing a ledger? Start with QuickBooks Online vs Xero.