We understand that when your business is just getting started, you may choose to do your own bookkeeping for awhile. DIY bookkeeping can be overwhelming and stressful, so we created the bookkeeping checklist below, organized by weekly and monthly tasks, to make things easier for new (or established) service-based businesses just like yours.
What’s the one nugget of information we want you to remember? Make time to work on your numbers! Put it on your calendar and commit to doing the work on a regular basis. Set aside a couple of hours a week, or more, depending on the size of your business. And refer to this bookkeeping checklist often. It will help you stay on track and out of trouble!
Weekly
- Check cash balances. Start the week by looking at how much cash you have. Then update your cash tracker with the projected cash inflows and outflows you expect during the week and month to make sure you don’t run out of cash. Don’t forget to factor in loan and credit card payments.
- Create and send invoices. Your invoices should have a due date, so your customers know when the payment is due, and clear instructions on how to pay.
- Review overdue customer accounts. Collecting customer payments is crucial for your small business to thrive. If you use software to invoice customers, it’s easy to review overdue accounts and send reminders and/or statements to customers who are late making payments.
- Deposit checks and cash. If customers pay by check or cash, set aside time to make those bank deposit(s) each week.
- Record payments and bank deposits. Be sure to record customer payments in the software as they come in, so you don’t inadvertently send reminders to customers who have already paid. Deposits should be recorded too.
- Review and run payroll. If you have employees, follow your company’s payroll schedule (weekly, bi-weekly, semi monthly, etc.) Did you know missing payroll or paying late can have penalties and other consequences? Make sure you have procedures in place to never miss a payroll.
- Record bills and request Form W-9. If you’re using software, record vendor bills as you receive them. Set up a digital folder for unpaid bills and organize them by due date. As a best practice, request a copy of Form W-9 from all new vendors who will provide services, such as law firms, consultants, marketing agencies, etc. Your business may be required to file 1099s at year end and you’ll need the information from Form W-9 to do this.
- Pay bills and record bill payments. Select one day every week (or every 2 weeks depending on volume) to pay bills and record the payments in your software.
- Organize bills, receipts, and payroll reports. Too many small business owners overlook this important step. I recommend organizing bills and receipts by category or vendor, with sub-folders for each year. Payroll reports can be organized by year and check date. For certain business deductions, such as meals, entertainment, travel or auto expenses, document the dates, destination, event, relationship and business purpose. You never know when you might need these records to support your tax deductions.
- Record bank transactions. If using software, this means reviewing and adding transactions that have synced from your connected bank and credit card accounts. If using a spreadsheet, review your bank activity for the week and add the new transactions to it. Here are some tips when adding transactions:
- Enter all the information for each transaction, including payee or customer name.
- Do you have loans? Only the interest portion is deductible (expensed), so don’t forget to split loan payments between principal and interest.
- Payroll transactions may require extra steps to correctly categorize wages, taxes and benefits, so if you’re not sure how to record these, ask for help from your tax accountant or trusted advisor.
- If using software, be sure to match transactions downloaded from the bank to transactions you have already recorded – such as customer payments, bill payments and deposits – to avoid having duplicates.
- Sometimes you’ll encounter transactions you don’t know how to categorize, and that’s ok. Add them to an ‘Ask My Accountant’ or ‘Uncategorized Expenses’ account and come back to these transactions later.
Monthly
- Review bank and credit card activity. Keep an eye out for customer payments or bill payments that haven’t been recorded in the software and fraudulent or erroneous transactions that need to be investigated.
- Review accounts payable. Review unpaid bills at the end of the month in your software. Do they agree with the bills in the Unpaid Bills folder? If not, investigate any discrepancies.
- Review overdue customer accounts. If using software, run an accounts receivable aging summary report to ensure you have recorded all activity, including new invoices, customer payments, and write offs in your customer accounts. Investigate any customer balances that look off.
- Categorize Uncategorized Expenses. Now it’s time to tackle transactions remaining in ‘Ask My Accountant’ or ‘Uncategorized Expenses’. Don’t know how to categorize certain transactions? Ask your tax accountant or trusted advisor for help.
- Reconcile bank and credit card accounts. Compare the bank activity in your software or spreadsheet to the activity on the bank statement. If you’re using software, this reconciliation is easy. Any discrepancies must be investigated and resolved.
- Reconcile merchant accounts. If your business receives payouts from payment processors, such as Stripe or PayPal, these deposits may require extra steps to be recorded properly. Do you understand what’s included (or not included) in the net payouts? If not, ask for help with this so your income and expenses are accurately recorded in your books.
- Review and reconcile other accounts. Payroll liabilities, retirement contributions payable, and owner withdrawals are other balance sheet accounts that should be reviewed monthly. And don’t forget to reconcile loan balances to the bank’s records.
- Review comparative financial reports. If you use software, run and review a comparative Balance Sheet and Profit and Loss report and look for trends and anything that seems off. You can compare the current month to the prior month, or year-to-date to the prior year, etc. We recommend filtering a year-to-date Profit and Loss by month, to see the numbers for each month separately at a glance.
- Review budget vs actual. Update your budget tracking spreadsheet with the numbers from the Profit and Loss report to see how you’re doing against the budget so you can make changes if necessary.
- Download bank statements. Save digital copies of all bank, credit card and loan statements for your records, organized by financial institution and year. Copies of customer checks and bank deposit slips can be saved with the corresponding bank statements.
If you still have questions about DIY-ing your bookkeeping, click the ‘Book a Call’ button on the Home page and connect with us!