The Ultimate Monthly Bookkeeping Checklist

By PRETTY BOOKS ON August 22, 2022
There are a lot of moving parts in your small business. Streamlining your workflow is key to saving time and money- two essential things for a successful small business. These checklists address every corner of your business to set you up for success.

What is Bookkeeping?

Bookkeeping, at it’s core, is keeping track of the money going in and out of your business. Bookkeepers record your income and expenses so you have the information you need to make informed decisions for your company. Clearly, bookkeeping is important.

But bookkeeping is also tricky. Without a doubt, you need to be accurate and organized with your bookkeeping to comply with the law, analyze your business’ performance, and create insightful financial reports. Our bookkeeping checklist can help you establish a habit of staying organized and ensuring your numbers are accurate.

Without further ado, here are the five things you need to check off monthly to stay on top of your bookkeeping.

5 steps for accurate and organized bookkeeping

1. Enter new transactions

In order to track your numbers, you first have to record them. Record all expenses and income into your accounting system regularly throughout the month. This means every transaction- from your bank accounts to credit cards to PayPal and Shopify.

🔵 Helpful hint: If your accounting software has automatic bank syncing, use it! It makes this process much, much easier. Just be sure to proactively check for any errors.

2. Categorize income and expenses

This step is all about organization. Your chart of accounts is a list of categories that describe your business’ transactions. The money going in and out of your business needs to be categorized accordingly so your business can remain organized. Give each income and expense a relevant category, like “overhead,” “SAAS,” or “marketing.”

3. Reconcile your account

Now it’s time to reconcile, which simply means that you’re comparing your records against a report or source outside of your accounting software. The most common form of reconciliation is bank reconciliation, or comparing the records from your accounting software with your bank statements.

Check for anything that doesn’t match so you can make sure you’re not missing records. Make sure you reconcile once a month minimum so you can ensure that the numbers in your accounting system are correct.

4. Review your P&L

It’s time to look at your trends! Your Profit and Loss Statement, or P&L for short, shows how much money you’ve made and spent over a given period- such as each month or quarter. Your P&L is important in showing the profitability of your business. Here are a few numbers you’ll encounter in a P&L:

  • Revenue: Money coming in from sale of products or services
  • Cost of goods sold: Money going out that is directly associated with a sale
  • Expenses: Money going out regardless of your sales. Think of these like your overhead, such as rent and internet.

5. Verify your balance sheet

Last but not least, it’s time to reflect on your balance sheet. Your balance sheet gives you insight into how much your business is worth (based on assets, liabilities, and equity). Unlike your P&L, the numbers on your balance sheet get carried forward. This means that your balances consider everything from the conception of your business to now.

  • Assets: Anything you own of value that you can trade, such as cash, inventory and fixed assets
  • Liabilities: Anything you owe, such as bills, loans, and wages
  • Equity: How much you contributed and how much you earned.

🔵 Fun fact: When you check your balance sheet, you’re able to see a snapshot of your business’ financial position at any point in time. It’s almost like the story book of your business!


Download our monthly bookkeeping checklist on our resources page

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The information provided in this post is for general informational and educational purposes only and is not a substitute for professional advice. Consult your financial, business, or tax advisor with respect to matters referenced in this post. Pretty Books assumes no liability for actions taken in reliance upon this information.
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