Month-End Close Checklist for Small Businesses

A close is a fixed set of tasks done in the same order every month, so the statements mean the same thing each time. Work top to bottom, because later steps depend on earlier ones: a reconciliation done before the last transactions are in has to be done again. This is general information. Your accounting method, business structure and software change the details, and a CPA has the final word on how any unusual item is treated.

1. Set the cutoff

• Confirm the period you are closing and the last day of it.
• Import or enter every bank and card transaction through that last day.
• Check that deposits in transit and uncleared payments are dated in the right month.

2. Clear the unsorted items

• Categorize every transaction sitting in an uncategorized, suspense or ask-my-accountant account. If one stays, note why.
• Match payments to the invoices and bills they settle.
• Look at undeposited funds or any clearing account. It should be empty, or hold only items you can name.

3. Reconcile the accounts that touch cash

• Reconcile each bank account to the statement ending balance.
• Reconcile each credit card the same way.
• Investigate differences before moving on. Do not plug a gap to make the number agree.
• Reconcile any payment processor balances to their own reports.

4. Review receivables and payables

• Run an aging report on what customers owe. Chase the old items, and flag any you think will not be paid for your accountant’s view.
• Make sure every bill received for the month is entered, including ones dated near the cutoff.
• Run the payables aging and check it against what you actually owe.

5. Record accruals and deferrals

Accrual entries put income and costs in the month they belong to, not the month the cash moved. Which ones apply depends on your accounting method, so ask your CPA if you are unsure.

• Expenses incurred but not yet billed, such as utilities or a contractor’s finished work.
• Wages earned but not yet paid at month end.
• Prepaid items, such as insurance paid for a year, spread over the months they cover.
• Money received in advance for work not yet delivered, held as deferred revenue until earned.

6. Check payroll and other liabilities

• Compare payroll totals in your books to the payroll provider’s reports.
• Confirm payroll tax and withholding balances match what has been paid and what is due.
• Reconcile sales tax or similar collected amounts to your records. Rules and filing dates vary by place.
• Compare loan balances to lender statements, and split each payment into interest and principal.

7. Post recurring adjustments

• Depreciation, according to your asset schedule.
• Inventory changes, if you hold stock.
• Owner draws, contributions or distributions, kept apart from business expenses.
• Any correcting entries, each with a short note on why.

8. Review the statements

• Read the profit and loss against last month and against the same month last year. Ask about any line that moved a lot.
• Read the balance sheet for oddities: negative balances where there should be none, old open items, accounts that should be zero.
• Check that cash on the balance sheet equals the reconciled bank balances.
• Make sure income and expense totals look reasonable given what you know happened.

9. Close the period

• Save or export the reports for the month.
• Lock the period in your software if it has that feature, so old months do not change by accident. Ask your bookkeeper or accountant before you reopen one.
• Write a short list of open questions for your accountant.

Keeping it consistent

The point of a checklist is repetition. Keep the list somewhere you can tick it off, and write down how long the close took, so you can see it getting faster. If you are unsure which steps belong to you and which to a professional, the bookkeeper or accountant comparison sets out who normally does what. Unfamiliar words are defined on the accounting terms page, and the month-end close section goes deeper on single steps.