A month-end close checklist for small businesses

The checklist

1. Record everything. Enter all sales, invoices, supplier bills, receipts and refunds dated in the month. Chase missing receipts now, not at tax time.
2. Reconcile every bank and credit card account to its statement. See how to do a bank reconciliation.
3. Review accounts receivable. Check the aging report, follow up on overdue invoices, and talk to your accountant before writing anything off.
4. Review accounts payable. Make sure every bill is entered once, nothing is paid twice, and due dates are planned for.
5. Check inventory. Count high-value or fast-moving items, record adjustments, and confirm the inventory balance matches your stock records.
6. Record adjustments. Spread prepaid expenses such as annual insurance across the months they cover, record depreciation if your accountant has set it up, and record income earned or costs incurred that are not billed yet.
7. Check tax and payroll liabilities. Sales tax and payroll balances in your books should match what you filed and paid.
8. Review the reports. Compare the profit and loss statement and balance sheet with last month and the same month last year. Investigate anything that moved more than you expected.
9. Sign off and lock the month. Once the owner has reviewed it, close the period so later changes need a deliberate approval.
10. Save a close package: the statements, reconciliations and reports, so you or your accountant can see what was reviewed.

How long should it take?

For a small business with tidy records, a few hours to a couple of days. The biggest time sinks are missing receipts and unreconciled accounts. Recording transactions weekly, rather than all at month-end, makes the close much faster.

Tips for a faster, cleaner close

• Set a close date, such as the 5th business day, and keep it every month.
• Keep a running list of open questions for your accountant instead of guessing.
• Never change a closed month quietly. Record a correcting entry in the current month, or reopen the month on purpose and note why.
• Look at gross margin every month. A sudden change often points to a missing bill or a costing mistake.

Extra steps for businesses that sell products

• Add late freight and duty bills to the shipments they belong to. Our landed cost guide explains why.
• Check that goods received but not yet billed are recorded the way your accountant prefers.
• Compare inventory turnover with last month. The inventory turnover calculator helps.

Doing this in YourAILedger

YourAILedger brings reconciliations, missing documents, exceptions and owner approvals into one guided close checklist, and keeps a record of what was reviewed. See month-end close software.