Bookkeeper Group

Keeping it Real

Monthly Close Checklist (Free)

Office

"Closing the Shop" for Your Finances

Imagine running a retail store. At the end of the day, you lock the doors, count the cash in the register, and make sure everything is secure before you go home. That is what a "Monthly Close" is for your bookkeeping.

It is a routine process to verify that all the financial activity for the month is recorded, accurate, and finalized. Once you "close" a month, you shouldn't change it. This gives you a solid foundation to build on for the next month.

The "Minimum Viable Close" (MVC)

If you are a freelancer or a small business owner doing your own books, you don't need a Wall Street-level closing process that takes 10 days. You need a Minimum Viable Close.

The MVC focuses on the essentials:

  1. Is the cash real? (Bank Reconciliations)
  2. Are the expenses categorized reasonably well? (Review)
  3. Did I capture everything important? (Completeness)

If you do these three things, you are 90% of the way there. This checklist is designed to get you to that confident "MVC" state.

The Checklist

Phase 1: Preparation

  • Gather Statements: Download PDF statements for all bank accounts, credit cards, and payment processors (Stripe, PayPal).
  • collect Receipts: ensure you have digital copies of major receipts (especially for anything over $75).
  • Update Bank Feeds: Log in to your software and refresh the bank connections to ensure all transactions are imported.

Phase 2: Reconciliation (The Most Important Step)

  • Reconcile Checking Accounts: Match the software balance to the bank statement ending balance.
  • Reconcile Savings Accounts: Don't forget interest income!
  • Reconcile Credit Cards: This is crucial for catching subscription creep.
  • Reconcile Loans: Ensure the payment is split correctly between Principal (liability reduction) and Interest (expense).

Phase 3: Review & Cleanup

  • Review "Uncategorized": Check your "Ask My Accountant" or "Uncategorized Expense" account. Move these items to their proper home.
  • Check for Duplicates: Scan your vendor list. Do you have "Home Depot" and "The Home Depot"? Merge them.
  • Personal vs. Business: Did you accidentally pay for Netflix with the business card? Mark it as an "Owner's Draw" (Equity), not an expense.
  • Accruals (Optional but Recommended):
    • Payroll: Did the pay period end on the 30th, but you paid it on the 2nd? You might need to record the expense in the month it was earned.
    • Invoices: Have you sent out all invoices for work done this month?

Phase 4: Reporting & Reflection

  • Review the Profit & Loss (P&L): Look at the totals. Do they make sense?
    • Sanity Check: If "Office Supplies" is $5,000 this month and usually $50, click on it. You might have miscategorized a laptop purchase (which should be an Asset).
  • Review the Balance Sheet:
    • Negative Balances: Are any credit cards showing a positive balance? Are any bank accounts negative? Investigate.
  • Save the Report: Save a PDF of the P&L and Balance Sheet to a "Financials" folder on your computer.

Phase 5: Lock It Down

  • Set a Closing Date: In your software (QuickBooks, Xero, etc.), set a "Closing Date" password. This prevents you (or anyone else) from accidentally changing history.

Pro Tips for First-Timers

  1. Don't let it pile up. Doing this monthly takes 1 hour. Doing it yearly takes 3 days of misery.
  2. Perfection is the enemy of done. If you are stuck on a $4.00 receipt for Amazon, mark it as "Office Supplies" and move on. Your time is worth more than the $4.00.
  3. Ask for help. If you see a negative number where a positive one should be (like a negative loan balance), stop and Google it or ask a pro. It's easier to fix now than at tax time.