A close is not a big accounting exercise. It is the same short list of steps, done in the same order, within two weeks of the month ending — which is the difference between books you can make a decision from and books you can only file a return with.
Gather
- Statements for every bank, credit card and loan account
- Payroll reports for the period
- Receipts and bills that never made it into the system
- Merchant and platform payout reports
The gathering step is where most months are lost. A shared folder, a scanning app, or a standing rule that receipts get photographed at the till beats a monthly hunt through a glovebox.
Record and categorize
Code everything for the month, including the awkward items. Transactions parked in "Ask my accountant" are fine as a queue and expensive as a habit — clear them in the same close, by asking the one question that settles each. Owner transfers are recorded as draws or contributions, never as income or expense.
Reconcile everything with a statement
Every account, not just the operating one. Credit cards and loans are where drift hides. See bank feeds don't reconcile your books for what reconciliation actually proves and what to do when it won't balance.
Review the balance sheet, not only the P&L
Three minutes here catches most errors the profit and loss will never show:
- Does every bank and card balance match the statement?
- Is accounts receivable made up of invoices you expect to collect, or does it include work billed twice?
- Is accounts payable real, or does it hold bills already paid by card?
- Do loan balances match the lender, with interest posted to interest?
- Are there negative balances anywhere? They are almost always a coding error.
Then read the profit and loss
Compare the month to the prior month and to the same month last year, and look at the three biggest movements. The goal is not a variance report — it is an explanation of what changed, in a sentence each. If a line surprises you and nobody can explain it, that is the item to chase before the month closes.
Close the period
Set the closing date and password once everything reconciles. Note anything that will need attention later — an asset purchase to be depreciated, an insurance payment covering the year — so those items reach your CPA as a short list rather than a discovery.
A realistic monthly timetable
- Days 1–5: statements arrive and are collected; payroll reports are filed with them.
- Days 5–10: transactions coded, questions asked and answered.
- Days 10–15: accounts reconciled, balance sheet reviewed, period closed.
- By day 20: reports delivered and read — with the two or three numbers that matter to this business on top.
Two or three numbers is deliberate. A monthly pack that nobody opens is the same as no reporting at all. See small business bookkeeping for how we run this for clients.
