Closing your books every month is the single best habit for any business. It keeps your numbers accurate, makes tax returns quicker and means there are no nasty surprises at year-end. Here is a simple checklist you can follow.
1. Reconcile every bank and card account
Match each transaction in your accounting software to your bank and credit card statements. The closing balance in your software should equal the balance on the statement. If it doesn’t, find the difference now — it only gets harder later.
2. Record all sales and invoices
Make sure every invoice you issued this month is in the system, and that payments received are matched to the right invoices. Don’t forget payment platforms such as Stripe, PayPal or marketplace payouts.
3. Enter supplier bills and expenses
Add every bill you received, even if you haven’t paid it yet. Attach the receipt or invoice to each expense so you have proof if you are ever asked.
4. Review unpaid invoices
Look at who owes you money. Chase anything overdue and note any amounts that may never be paid.
5. Check VAT coding
If you are VAT registered, check that each transaction has the right VAT rate. Mistakes here are the most common reason for incorrect returns.
6. Run your reports
Pull your profit & loss and balance sheet. Ask yourself: do these numbers look right compared to last month? Big unexpected changes usually point to a missing or miscategorised transaction.
7. Lock the period
Most accounting software lets you lock a month once it is closed. This stops anyone from accidentally changing past figures.
Short on time? This is exactly what we do for our clients every month. Book a free bookkeeping health check and we will show you where your books stand.