Small Business Bookkeeping Checklist and How to Use It

Good bookkeeping is as much about discipline as it is about understanding numbers. Bookkeeping involves many different tasks, from sorting to documenting to organizing and storing all the financial transactions of your small business. Each of these tasks comprises so many steps – noting every purchase or sale you make in detail, securely filing every bill and receipt, recording it all in the respective ledgers and other books, and of course, taking a backup of everything! Miss just one small step, and you might have to lose sleep and hours over it later during tax season.

But tedious as it sounds, cultivating bookkeeping “habits” isn’t as hard as you might think. As a small business owner, a proper schedule and checklist can keep your bookkeeping up-to-date and streamlined. And that’s exactly what we’re going to help you with today.

The Small Business Owner’s Bookkeeping Checklist

The first step to streamlining the bookkeeping aspect of your small business is to broadly divide the various tasks as per the frequency with which they need to be handled. Let’s divide them into these four categories:

• Daily
• Weekly
• Monthly
• Quarterly/Yearly

This is just a broad framework; you can customize and change the frequencies based on the volume of transactions your business attracts.

So, let’s begin.

Daily

(i) Review Previous Day’s Transactions: Just like at home you begin your day with a glance at the happenings of the previous day in the newspaper, a quick but thorough review of the previous day’s transactions gives you a clearer idea of where your business stands and what needs to be done on a particular day.

(ii) Check Cash Flow: A smooth, uninterrupted cash flow is the lifeline of any small business. Checking your cash position to know precisely how much cash you have in hand and how much is expected to come in or be spent on the following days is a good bookkeeping habit to start with on a workday. Not only does it help you make informed financial decisions but helps keep track of the “pulse” of your business.

Weekly

(i) Record and Review Transactions: Receiving payments from clients, making payments to suppliers, noting cash transactions, and other such routine transactions should be diligently recorded, and cross-checked with the respective bill or receipt weekly or daily depending on transaction volume. This will help you identify and clear any unpaid bills or send reminders for uncleared invoices in time. Glancing at these transactions to ensure you haven’t missed anything or there aren’t any gaps (signaling a potential fraud or theft) will save you much effort and headache in the future.

(ii) Filing Receipts and Documentation: Having recorded and reviewed all the transactions that happened during the week, make it a point to meticulously store the various documents, invoices, bills, and receipts — both physical and digital — securely with a backup every week. That way, you can organize all documentation easily and systematically, without having to hunt through hordes of documents during audits.

Monthly

(i) Reconciling Bank Records: Bank reconciliation is an important process, especially for small businesses. It entails cross-checking your business’ books of accounts and other financial data (including credit card dues) against your business bank account to make sure all transactions are duly accounted for. The purpose of this process is to identify any errors, miscalculations, or oversights in recording transactions. By doing it at the end of every month, you can easily adjust any mismatches in your books of accounts and even identify and curb any financial fraud in good time.

(ii) Process Payroll: Your employees are your true treasure. Ensuring they get their wages and salaries, as well as all the other welfare benefits, they are entitled to, on time, is crucial.  

(iii) Reviewing Financial Statements: A regular review of your profit and loss statements, balance sheets, inventory lists, and other financial data is perhaps one of the most important bookkeeping duties. Not only does this keep you informed of how your business is progressing, but it also helps plan for short and long-term investment opportunities, marketing strategies, and product expansion. Based on these numbers you can decide whether you have the resources necessary to stay on track of your goals and business plan.

Quarterly/Yearly

(i) Reviewing Budgets and Plans: All the information you have gathered and saved throughout the quarter or year on a daily, weekly, and monthly basis comes into action here, to compile your business’s quarterly and annual financial statements. These financial statements are also important from the business’ point of view as they also give you a clear picture of which areas need more attention, and which are doing well and can be expanded. Based on these observations and numbers, you can draw up the budget and other strategies for the upcoming year.

(ii) Filing Taxes: While businesses in some provinces have to file certain taxes (goods and services tax) every month, all businesses big and small have to do their taxes on a quarterly and yearly basis. Missing out on any deadlines could end up in heavy penalties and audits. So, make sure to keep track of which taxes must be paid and by what date.

(iii) Auditing: Rather than having the taxman come knocking with an audit, it’s better to schedule your audit at least once a year to help identify any loopholes or gaps in your business processes or finances, so that you can rectify them in time. An internal audit is good, but getting an external expert to audit once in a while is a great way to get a transparent, unbiased, and thorough check done.

As mentioned earlier, you can customize this checklist to better fit your small business needs. Feel free to shift some points from one category to another, as is required. The objective is to draw up a checklist and follow it as closely as possible. It’ll make your life much easier, your business systems much stronger and your business processes much faster.

Contact KSSP Partners LLP in Markham to Help You with Bookkeeping

Talk to a professional bookkeeper to help you set up a process to document transactions and automate tasks where possible. To learn more about how KSSP Partner LLP can provide you with the best accounting and bookkeeping expertise, contact us online, or by telephone at 289-554-5997.