Why a monthly close matters
"Close" is the process of finalizing a month's books so the numbers are complete, accurate, and ready to use. Without it, you're making decisions on half-finished data and discovering problems at tax time. A good bookkeeper closes every month on a schedule; a great one tells you what the numbers mean.
Here's the checklist we use at Jax Bookkeeper. Whether you do your own books or outsource them, every item should happen every month.
The checklist
1. All transactions categorized
Every line in every bank feed is matched or added and coded to a real account. Nothing sits in "Uncategorized" or "Ask My Accountant" past the close.
2. Bank accounts reconciled
Each checking and savings account is reconciled to the statement ending balance. The difference is zero, and outstanding items are genuinely in transit, not stale.
3. Credit cards reconciled
Same as bank accounts. Personal charges on business cards are coded to owner draw or a shareholder receivable, not expenses.
4. Loans and lines of credit tied to lender statements
Each loan balance in QuickBooks matches the lender's statement. Payments are split correctly between principal and interest. Lines of credit reflect current draws and paydowns.
5. Undeposited funds cleared
The Undeposited Funds balance is zero or matches payments genuinely received but not yet deposited. Merchant processor clearing accounts (Square, Stripe, Toast, Shopify) also reconcile to zero or to pending payouts.
6. Accounts receivable reviewed
The A/R aging matches the balance sheet. Past-due invoices are flagged for follow-up. Invoices that will never be collected are written off, so you're not paying tax on income you'll never see (accrual filers).
7. Accounts payable reviewed
All vendor bills for the month are entered. The A/P aging shows what's due and when. Duplicate or already-paid bills are removed.
8. Payroll tied to the ledger
Gross wages, employer taxes, and withholdings from the payroll provider's reports match what's recorded. Payroll liability accounts equal what's actually owed (typically zero after each remittance). Officer compensation for S corps is separated from other wages.
9. Sales tax reconciled
Sales tax collected in the POS or invoicing system matches the liability account. The DR-15 payment is recorded against the liability, not as an expense.
10. Recurring adjustments posted
Depreciation (monthly or at year end), prepaid expense amortization (insurance, software paid annually), and accrued expenses if you're on accrual basis.
11. Owner and equity transactions reviewed
Draws, contributions, distributions, and shareholder loans are correctly recorded and documented. This is where tax problems start when it's sloppy.
12. Reports produced and reviewed
Profit & loss (this month, last month, same month last year), balance sheet, and cash flow statement. Someone reads them and asks: does this make sense? Any account that moved more than 15% gets a one-line explanation.
What to look at when the reports arrive
You don't need to study every line. Five questions catch most issues:
- Is cash moving the same direction as profit? If profit is up and cash is down, you're probably building receivables or inventory, or paying down debt. Know which.
- Is any liability growing? Credit cards, payroll taxes, sales tax, or A/P climbing month over month is the earliest warning sign of trouble.
- Is gross margin stable? A drop means pricing, cost, or categorization changed. Find out which.
- Are receivables aging? If 60+ day A/R is growing, collections need attention now.
- Does the balance sheet look like your business? If there's an account you don't recognize, ask.
The timeline
A clean close should be done by the 15th of the following month. If your books arrive on the 30th, they're too late to act on. If they arrive quarterly, they're history, not management information.
Want this done for you?
This checklist is exactly what we do for every client, every month, with a CPA reviewing the result. See monthly bookkeeping or get a price in two minutes.