Month-end close checklist for small businesses

What is on the checklist?

1. Record all transactions

   Import bank and card feeds, categorize every item, attach receipts.

2. Reconcile bank accounts

   Book balance agrees to the statement at month end. See bank reconciliation.

3. Reconcile credit cards and loans

   Balances agree to statements.

4. Reconcile payment platforms

   Stripe, PayPal, Shopify and marketplace clearing accounts.

5. Review receivables and payables

   Aging reports, overdue items, duplicates.

6. Check sales tax

   Liability agrees to the returns due.

7. Check payroll

   Wages, withholdings and deposits agree to payroll reports.

8. Post adjustments

   Depreciation, inventory, prepaid expenses and accruals as needed.

9. Review the reports

   P&L and balance sheet against last month and budget.

10. Lock the period

    So past months cannot be changed by accident.

Which reconciliations matter most?

An account that cannot be reconciled usually points to a missing transaction, a duplicate, or an item posted to the wrong account. Investigate differences when they are small; left alone, they compound month after month.

Keep a short note of each reconciling item, such as a payout in transit or an uncleared check, so the next month's close starts from a clear position.

What does a close calendar look like?

Sales tax returns are often due around the 20th, so closing first lets returns be prepared from reconciled figures. See sales tax filing frequency.

Who should do the close?

An owner can do it with good software and an hour or two a month, but many hand it to a bookkeeper once there are several accounts, payroll or marketplaces. The owner should still review the final reports. See bookkeeper vs accountant and QuickBooks vs Xero vs Wave.

See when to hire a bookkeeper.

What should the review look for?

• Expenses in the wrong category, or unusually large amounts.
• Uncategorized or suspense balances that should be zero.
• Owner draws recorded as expenses, or contributions as income. See owner draws and contributions.
• Negative balances on asset accounts, or positive balances on credit cards that should be liabilities.
• Gross margin or expense ratios that changed without a reason.

The errors this review catches are listed in bookkeeping mistakes that cause tax problems.

How long should it take?

For a small business with good feeds and receipts, a few hours. Aim to close within the first one to two weeks of the following month, so the numbers are still useful for decisions and quarterly estimated tax.

A consistent close date each month makes it a routine rather than a project, and a short written checklist means nothing is skipped when someone else covers it. Note any open questions for your accountant as you go, rather than saving them for year end, when the details are harder to recall.

What extra steps do online sellers need?

Record each marketplace's settlement report gross, reconcile payouts, track inventory and cost of goods sold, and check sales tax collected on your own store. See Amazon bookkeeping, Shopify bookkeeping and refunds and chargebacks.

Check also that inventory purchases were recorded as inventory, not expenses, and that marketplace reimbursements for lost stock were recorded.

What extra steps come at quarter and year end?

At each quarter end, check estimated tax payments and payroll returns. At year end, count inventory, review fixed assets and depreciation, issue 1099s and W-2s, and prepare the information your tax preparer needs. See year-end tax planning.

This guide is general information. It is not tax or legal advice for your situation.