1. Get the statements
Collect statements for every bank account, credit card, loan and payment processor. Compare each one with what the software shows as of the month-end date.
2. Reconcile every account
Match each bank and card account to its statement until the difference is zero. Anything that will not match gets investigated, not plugged. See our reconciliation guide.
3. Clear the uncategorized
Empty the ask-my-accountant or uncategorized account. Each item either gets a category or a question for the owner.
4. Check invoices and bills
Review what customers owe you and what you owe vendors. Look for old unpaid invoices, duplicated bills and payments applied to the wrong customer.
5. Payroll and sales tax
Confirm payroll reports match what was withheld and paid, and that any sales tax collected is recorded as a liability until it is paid.
6. Review the reports
Read the profit and loss and the balance sheet. Compare with last month. Big changes need an explanation, and odd balances such as negative inventory or a cash account that does not look like the bank are worth a closer look.
7. Lock the period
Most accounting software can close the books through a date so old months do not change by accident. Ask your accountant before you set the date, and keep a note of who can change closed periods.
Common questions
How long should a monthly close take?
For a small business with clean records it can take a few hours. Late statements and missing receipts are what stretch it out.
Do I need to close every month?
It is much easier than catching up at year end. Monthly keeps problems small and taxes simpler.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.