Monthly Close Checklist

Work through this in order within the first week or two after month-end. The order matters: categorize before you post entries, post entries before you reconcile, and reconcile before you trust a single report.

1. Categorize everything

• Zero uncategorized transactions — nothing sitting in "Ask My Accountant" or "Miscellaneous"
• Categories consistent with last month — the same expense in the same account every time, or your trends mean nothing
• Personal spending flagged and moved to owner draw — not left as a business expense (here's why that matters)
• Receipts and invoices for significant purchases filed where you can find them

2. Post closing entries

• Monthly depreciation posted for vehicles and equipment, per your fixed-asset schedule
• Prepaid expenses amortized — annual insurance premiums, subscriptions, and similar spread across the months they cover instead of hitting one month all at once
• Customer deposits and deferred revenue recognized as the work is actually earned
• Accrued payroll posted with a reversing entry — if month-end lands mid-pay-period, the wages employees have earned but not yet been paid belong in this month: debit wages expense, credit wages payable for the days worked (10 days of a two-week period, say). Date a reversing entry on the 1st that flips it (debit wages payable, credit wages expense), so when payroll actually runs you post it like any normal run and the timing works itself out
• Inventory and cost-of-goods-sold adjustments posted, if you carry inventory

3. Reconcile every account

• Every bank account reconciled to the statement — book balance matches bank balance, no unexplained differences
• Every credit card reconciled the same way
• Loan balances match lender statements (the principal/interest split trips up DIY books more than anything else)
• Merchant processor deposits (Stripe, Square, etc.) tie out — gross sales, fees, and net deposits all recorded, not just the net

4. Review money coming in (AR)

• All completed work invoiced — unbilled work is a loan you're making for free
• AR aging reviewed — chase anything past 30 days now, not at 90
• Customer payments applied to the right invoices (unapplied payments quietly corrupt AR)

5. Review money going out (AP)

• All vendor bills entered, even if not yet paid — you can't manage cash you can't see coming
• Upcoming payments scheduled against your expected cash (a 13-week forecast makes this step easy)
• Duplicate or surprise charges questioned — subscriptions creep

6. Payroll & taxes

• Payroll runs posted correctly — wages, employer taxes, and withholdings in their own accounts
• Payroll tax liabilities cleared when remitted — a lingering balance means something wasn't paid or wasn't recorded
• Sales tax collected, filed, and paid for the period (due the 20th in Arkansas and Texas — see the deadline calendar)

7. Read the results

• P&L reviewed against last month and the same month last year (the 10-minute routine)
• Balance sheet scanned for red flags — negative balances, ballooning AR, lingering payroll liabilities
• Cash position checked against what's due in the next 30 days
• One question written down and answered before next month's close

8. Lock it down

• Close the period in your accounting software so prior months can't silently change
• Save the month's P&L, balance sheet, and reconciliation reports — your future loan application will thank you