A Small Business Accounting Checklist – help keep your business healthy

By Paul Maddison, Bookkeeping Intelligence.

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What tasks should you be undertaking to keep your business healthy?

Daily Accounting Tasks

1. Check Cash Position

Start your day by checking how much cash you have on hand. Knowing how much you expect to receive and how much you expect to pay during the upcoming week/month is important.


Weekly Accounting Tasks

2. Record Transactions

Record each transaction (invoicing customers, receiving cash from customers, paying suppliers, etc.) in the proper “account” daily or weekly, depending on volume.

3. Document and File Receipts

Keep copies of all invoices sent, all cash receipts (cash, cheque and credit card deposits) and all cash payments (cash, cheque, credit card statements, etc.).

Start files, sorted alphabetically, for easy access. Create a payroll file sorted by payroll date and a bank statement file sorted by month. Avoid the temptation to wait until the end of the month, or quarter, or even the end of the year, to file your paperwork. Unless you have a small volume of transactions, it’s better to have separate files for assorted receipts kept organised as they arrive. Many accounting software systems let you scan paper receipts and avoid physical files altogether.

4. Review Unpaid Bills from suppliers

Every business should have an “unpaid suppliers” folder. Keep a record of each of your suppliers that includes invoice dates, amounts due and payment due date. If suppliers offer discounts for early payment, you may want to take advantage of that if you have the cash available.

5. Pay suppliers

Track your accounts payable and have funds earmarked to pay your suppliers on time to avoid any late fees and maintain favourable relationships with them. If you are able to extend payment dates to net 60 or net 90, all the better.

6. Prepare and Send Invoices

Be sure to include payment terms. Without a due date, you will have more trouble forecasting revenue for the month. To make sure you get paid on time, always use an invoice template that contains the right details such as payment terms, itemised charges, your contact details and payment details.

7. Review Projected Cash Flow

Managing your cash flow is critical, especially in the first year of your business. Forecasting how much cash you will need in the coming weeks/months will help you retain enough money to pay bills, including your employees and suppliers. Plus, you can make more informed business decisions about how to spend it.

All you need is a simple statement showing your current cash position, expected cash receipts during the next week/month and expected cash payments during the next week/month.

Monthly Accounting Tasks

8. Balance Your Business Bank Account

You need to know that your cash business transaction entries are accurate each month and that you are working with the correct cash position. Reconciling your cash makes it easier to discover and correct any errors or omissions—either by you or by the bank—in time to correct them.

9. Review Past-Due (“Aged”) Receivables

Be sure to include an “ageing” column to separate “open invoices” with the number of days a bill is past due. This gives you a quick view of outstanding customer payments. The beginning of the month is a good time to send out overdue reminder statements to customers, clients and anyone else who owes you money.

10. Review Stock positon

If you have stock, set aside time to reorder products that sell quickly and identify others that are moving slowly and may have to be marked down or, ultimately, written off. By checking regularly (and comparing to prior months’ numbers), it’s easier to make adjustments quickly so you maintain an accurate position.

11. Process or Review Payroll and Approve Tax Payments

You will have an established schedule to pay your employees (usually monthly), but you also need to meet PAYE/NI. Review the payroll summary before payments are disbursed to avoid having to make corrections during the next payroll period. A payroll service provider can do all this to save you time and ensure accuracy at a reasonable cost.

12. Review Actual Profit and Loss vs. Budget and vs. Prior Years

Your profit and loss statement (also known as an income statement), both for the current month and year to date, tells you how much you earned and how much you spent. Measure it against your budget every month (or quarter). Comparing your actual numbers to your planned numbers highlights where you may be spending too much or not enough, so that you can make changes.

If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period year-to-date P&L to identify variances and make adjustments.

13. Review Month-End Balance Sheet vs. Prior Period

By comparing your balance sheet at one date to a balance sheet from an earlier date (i.e. 6 months earlier) you get a picture of how you are managing assets and liabilities. The key is to look for what is significantly up and/or down and understand why.

For example, if your debtors are up, is it due to increased recent sales or because of slower payments from customers?

Quarterly Accounting Tasks

14. Prepare/Review Revised Annual P&L Estimate

It’s time to evaluate how much money you are actually making, whether your net assets are going up or down, the difference between revenues and expenses, what caused those changes, how you are spending profits, as well as identifying trouble spots, and making adjustments to improve sales and margins.

15. VAT Return

If your company is registered for VAT, make sure your quarterly VAT return is submitted. Take the opportunity to review and use to review/update any budgets.

Annual Accounting Tasks

16. Review Debtors

Now it’s time to check significant overdue debtors and decide whether you think these customers will eventually pay or whether to write them off.

17. Review Your Stock

Review your current stock to determine the value of items not sold and any obsolete stock. Any write-down of stock can translate to a reduction in year-end taxes.

18. Review and Approve Full-Year Financial Reports and Tax Returns

Carefully review your company’s full-year financial reports before giving them to your accountant. Before you sign your return, be sure to review it for accuracy based on your full-year financial reports. If HMRC audits your company and finds any underpayment of taxes, it will come to you, not your accountant, for any additional taxes, penalty and interest.

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