Your company might not be growing and being as profitable as it could be if you don’t have a well-documented bookkeeping system. Employees might spend additional time with each client, going over any unfinished tasks. Thus, maintaining your books updated is crucial to attain success and expedite your business operations. To make sure nothing is missed, you can utilize a monthly bookkeeping checklist in addition to purchasing helpful Monthly Accounting Services software.
What is Monthly Bookkeeping?
Monthly bookkeeping is the practice of keeping track of and managing your finances each month. Keeping accurate and current financial records, tracking all income and expenses, and reconciling bank statements are a part of it. Guaranteeing that all financial transactions are properly documented and presenting a clear picture of a company’s financial health are the two key goals. It supports corporations in monitoring expenditures, monitoring cash flow, and making decisions based on reliable financial information.
Steps to Do Monthly Accounting/Bookkeeping
1. Record and classify profits and investments
To monitor the monthly financial condition of your firm, ensure that you document and categorize your monthly and yearly income and outlays. Both individual credit card purchases and credit card revenue transactions fall under this category. Further, the profit and loss statement for your taxes or potential audits will be created using this data.
2. Upgrade the software you use for bookkeeping
Upgrading your bookkeeping software is a critical step to ensure that everything goes smoothly. It can only be helpful when you keep it updated with every major to minor detail of your monthly financial situation. Systems like Jetpack Workflow may generate reports with more relevant data.
3. Reconcile business accounts
Every month, you should reconcile all of your bank, credit card, and cash accounts to make sure that your financial state truly reflects your company. Evaluating the finances that were left from the previous month to determine if they cleared this month is a paramount step in the process. According to monthly accounting services providers, it is also preferable to identify and correct any accounting issues during the current month. This is to avoid a monthly snowball effect of errors.
4. Check vendor and customer invoices
Enter customer payments into your bookkeeping software as soon as you receive them. By doing this operation, you prevent the mistake of getting in touch with clients who have previously paid you for the same invoice. It facilitates the management of your collected funds as well.
Similarly, you must check all of your vendor bills to see whether there are any that you haven’t paid yet. Make it a priority to pay any bills that are past due before the start of the next month. Inspecting your upcoming invoices at this time will also assist you in verifying that you are getting the worth of your money before you send in your payment. Once the payments are made, don’t forget to file them.
5. Maintain and issue payroll
It is imperative to pay your staff on schedule. Ultimately, they have to fulfill their financial commitments as well. Payroll must be processed at least once a month. It needs to be made and appropriately documented in addition to being issued.
6. Go through the old reports on accounts payable and receivable
This is a great opportunity to remind your clients about any past-due invoices you may have. Alternatively, make sure you’ve paid all of your vendor invoices, or contact them if necessary. These reports will show if you have any duplicate invoices, inaccurate transactions, or billing mistakes that you need to take care of.
7. Compute and Document Sales Tax
The sales tax must be computed, gathered, and paid by you. While you can pay sales tax quarterly, it is considerably less complicated to calculate it monthly. The same method applies to this kind of tax as well, albeit your county district may impose sales tax on you. Besides, keep in mind that you may be subject to interest penalties or have your property seized if you neglect to collect sales tax or do not pay it. However, all of this danger is eliminated when you include tax filings in your monthly tasks.
8. Assess the projected cash flow
Cash flow objectives are necessary for small business owners, but they also need to be attainable. In addition, it’s appropriate to modify such objectives to accommodate the present business environment. Plus, cash flow goals are even more significant if your enterprise is seasonal to sustain growth both during and after periods of high business activity.
If your financial accounts go above or below your budget, you might need to reconsider the estimates. Remember that comparing your current revenue with the revenues of previous months can help you plan forward even if you don’t have a budget.
9. Pay attention to your stock
Expert monthly accounting services providers suggest reviewing your inventory status periodically. This helps ensure that you are not caught off guard by a sudden scarcity of goods. To determine that everything goes as planned, you might want to inspect your inventory more frequently if you’ve r just finished a peak time.
10. Analyze the current vendor and client deposit report
Money sent by your company to a vendor who hasn’t sent you a vendor invoice for using funds is known as an open vendor deposit. Simply put, the orders that are still pending are displayed in the open vendor deposit reports. In such a case, request your vendor to complete the order and issue a purchase order invoice, so that you can transfer the funds from your asset account to COGS (Cost of Goods Sold).
11. Complete the month-end closing procedure
To portray your enterprise’s financial state, temporary accounts must be closed before creating the monthly financial statements. Therefore, the month-end checklist ought to contain (cash) journal entries for the closing of cost accounts and revenue accounts to the income summary account.
To sum up, monthly bookkeeping is one of the paramount aspects of financial management for companies of all sizes. To adhere to regulatory obligations and sustain the company’s long-term profitability, it guarantees the maintenance of precise and current financial records. So, create a checklist to ensure nothing is overlooked, stay efficient, and hire professional Monthly Accounting Services for further assistance!
Want year-end accounting services at an affordable cost? At O’Malley & O’Malley, LLP, we have a team of experts to help you monitor the progress of your financial situation. Contact us to acquire our comprehensive guidance along with optimum advice!
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