Thorough closing procedures including adjusting entries, accruals, and financial statement preparation. Your books are always current.
1. Bank & Merchant Reconciliations
- [ ] Reconcile All Bank Accounts: Verify that the ending balance in QuickBooks/Xero matches the bank statement.
- [ ] Reconcile Credit Cards: Ensure all business expenses are captured and balances match the statement.
- [ ] Merchant Account Clearing: Reconcile Stripe, PayPal, or Square accounts to ensure all fees are recorded and transfers to the main bank are cleared.
- [ ] Review Outstanding Checks: Investigate any checks or payments that haven’t cleared for over 30 days.
2. Accounts Receivable (A/R) & Revenue
- [ ] Review Open Invoices: Check for overdue invoices and send reminders/statements to clients.
- [ ] Record Bad Debt: Identify any uncollectible invoices and write them off if necessary (with owner approval).
- [ ] Uncategorized Income: Review any deposits sitting in “Uncategorized” and move them to the correct revenue account.
- [ ] Sales Tax: Verify that sales tax collected matches the liability report and prepare for filing.
3. Accounts Payable (A/P) & Expenses
- [ ] Review Unpaid Bills: Ensure all bills for the month have been entered and coded to the correct period.
- [ ] Expense Categorization: Review the Profit & Loss (P&L) for “Ask My Accountant” or “Uncategorized” entries.
- [ ] Vendor 1099 Review: Ensure new vendors have W-9s on file and are marked as 1099-eligible if applicable.
4. Payroll & Compliance
- [ ] Reconcile Payroll: Cross-check payroll reports (Gusto, ADP, etc.) against the General Ledger.
- [ ] Payroll Liabilities: Ensure all tax withholdings and benefits (401k, Health) are recorded and paid.
5. Balance Sheet & Journal Entries
- [ ] Prepaid Expenses: Adjust journal entries for insurance or software paid annually.
- [ ] Depreciation/Amortization: Record monthly depreciation for fixed assets.
- [ ] Loan Reconciliations: Confirm loan balances match the lender’s statement, separating principal from interest.
- [ ] Intercompany Transfers: Ensure transfers between accounts net to zero.
6. Final Review & Reporting
- [ ] Review Profit & Loss (P&L): Compare against the prior month or budget to identify any outliers or missing expenses.
- [ ] Review Balance Sheet: Ensure no negative balances exist in asset or liability accounts (unless expected).
- [ ] Close the Period: Set a “Closing Date” and password in the accounting software to prevent accidental changes.
- [ ] Generate Management Report: Export the P&L, Balance Sheet, and Cash Flow statement for client delivery.