How to Create a Monthly Bookkeeping Checklist

Good bookkeeping is essential for running a successful business. Regular, organized bookkeeping helps keep your financial records accurate, ensures compliance with tax laws, and gives you a clear picture of your business’s performance. 

A monthly bookkeeping checklist can streamline this process, making it easier to stay on top of your finances and catch any issues early. Here’s how to create a comprehensive monthly bookkeeping checklist to keep your business on track.

1. Review and Reconcile Bank Statements

One of the first steps in your monthly bookkeeping checklist should be to review and reconcile your bank statements. This process involves comparing your bank account records with your bookkeeping records to ensure they match. Reconciling bank statements helps you identify any discrepancies, errors, or unauthorized transactions that need to be addressed.

How to Reconcile Bank Statements:

• Compare each transaction on your bank statement with your accounting records.

• Identify and correct any discrepancies.

• Ensure all bank fees, interest earned, and charges are recorded in your books.

Reconciling your bank statements every month keeps your accounts accurate and helps prevent issues that could affect your financial reporting.

2. Reconcile Credit Card Statements

Just like your bank accounts, credit card statements should also be reconciled monthly. This ensures that all business expenses charged to your credit card are accurately recorded and categorized.

Steps to Reconcile Credit Card Statements:

• Match each expense on your credit card statement with entries in your bookkeeping records.

• Record any interest charges, fees, or refunds.

• Verify that all business-related expenses are correctly categorized.

Regularly reconciling credit card statements helps avoid inaccuracies and ensures that your financial statements provide a complete picture of your expenses.

3. Review and Organize Receipts and Invoices

Organizing receipts and invoices is crucial for tracking expenses and managing cash flow. It also helps ensure you have proper documentation for tax deductions and audits.

How to Organize Receipts and Invoices:

• Collect and store all receipts and invoices, either physically or digitally.

• Use accounting software to store digital copies and categorize expenses.

• Match receipts and invoices to recorded transactions to verify accuracy.

Organizing your receipts and invoices every month prevents last-minute scrambling at tax time and makes it easier to identify deductible expenses.

4. Review Accounts Receivable (AR)

Staying on top of accounts receivable ensures that your clients or customers pay you on time, improving cash flow and financial stability. Review your accounts receivable report each month to track outstanding invoices and follow up on overdue payments.

Tips for Managing Accounts Receivable:

• Generate an accounts receivable aging report to see outstanding invoices by due date.

• Send reminders for overdue invoices.

• Consider offering incentives for early payments or charging late fees if necessary.

Regularly reviewing accounts receivable helps you manage cash flow and ensures you receive payments promptly.

5. Review Accounts Payable (AP)

Just as it’s important to stay on top of what you’re owed, it’s also essential to keep track of what you owe to others. Reviewing accounts payable ensures you’re aware of upcoming payments and helps you avoid late fees or strained vendor relationships.

Steps for Managing Accounts Payable:

• Generate an accounts payable aging report to see upcoming due dates.

• Schedule payments for recurring expenses, such as rent, utilities, or suppliers.

• Prioritize payments to take advantage of early payment discounts when available.

Regularly managing accounts payable helps you maintain good vendor relationships and avoid unnecessary fees.

6. Review and Categorize Expenses

Accurate expense categorization is essential for understanding where your money is going and for maximizing tax deductions. Each month, review all recorded expenses and ensure they’re properly categorized according to your chart of accounts.

How to Categorize Expenses:

• Review each expense and assign it to the appropriate category (e.g., marketing, office supplies, travel).

• Correct any miscategorized expenses.

• Consult with an accountant if you’re unsure about certain expense classifications.

Proper expense categorization not only helps you understand your spending but also makes tax preparation easier and more accurate.

7. Prepare and Review Financial Statements

Monthly financial statements provide insight into your business’s performance and help you make informed decisions. Review your key financial statements each month to assess profitability, cash flow, and financial health.

Key Financial Statements to Review:

• Income Statement (Profit and Loss): Shows your revenue, expenses, and profit for the month.

• Balance Sheet: Provides a snapshot of your assets, liabilities, and equity.

• Cash Flow Statement: Tracks cash inflows and outflows to help you manage liquidity.

Regularly reviewing these statements enables you to monitor progress, spot trends, and adjust your strategy as needed.

8. Update and Review Inventory Records (if applicable)

If your business holds inventory, keeping accurate inventory records is essential for tracking costs and managing stock levels. Each month, review your inventory records to ensure they match your actual stock and adjust for any discrepancies.

Steps for Managing Inventory:

• Count your inventory and reconcile it with recorded quantities.

• Adjust inventory levels for any discrepancies, such as shrinkage or damaged goods.

• Update cost information to reflect any changes in prices from suppliers.

Accurate inventory records help you control costs, optimize stock levels, and prevent overstocking or stockouts.

9. Back Up Financial Data

Regular data backups protect your financial information from loss due to computer crashes, natural disasters, or data breaches. Set aside time each month to back up all financial data.

How to Back Up Financial Data:

• Use a cloud-based accounting platform that offers automatic backups.

• If you store financial data locally, back it up to an external drive or cloud storage.

• Ensure that backups are secure and accessible only to authorized personnel.

Backing up financial data safeguards your records and ensures you can quickly recover if something goes wrong.

10. Meet with Your Accountant (if applicable)

Monthly check-ins with your accountant or bookkeeper can provide valuable insights and ensure that your books are in order. An accountant can help you address any issues, optimize your tax strategy, and provide financial advice to support your business’s growth.

Topics to Discuss with Your Accountant:

• Any discrepancies or unusual transactions in your books.

• Opportunities for tax deductions or credits.

• Budgeting and cash flow management strategies.

Regular meetings with your accountant keep you informed and proactive about your finances, helping you make well-informed decisions.

A monthly bookkeeping checklist is an invaluable tool for keeping your business’s finances organized, accurate, and up-to-date. By following this checklist each month, you’ll stay on top of your financial records, ensure compliance with tax regulations, and gain insights that support better decision-making.

At Fintech Strategy Group LLC, we specialize in helping businesses streamline their bookkeeping processes and maintain accurate financial records. If you’d like support with monthly bookkeeping or need guidance on creating your own checklist, contact us today to schedule a free 30-minute consultation. 

We’d love to help you keep your finances in top shape! Feel free to share your questions and thoughts in the comments below.