How to Process for Closing Out Books Each Month

Introduction

This tutorial provides a step-by-step guide for closing your books each month using QuickBooks. Whether you use QuickBooks Desktop or Online, this process will help ensure your financial records are accurate and up-to-date. Following these steps will streamline your month-end closing process and help you maintain better financial management.

Step 1: Check Accounts Receivable

• Begin by reviewing your Accounts Receivable (A/R) to ensure all customer payments are accounted for.
• Generate the following reports:
  • A/R Aging Summary
  • A/R Aging Detail
  • Open Invoices Report
• These reports will help you identify overdue invoices and take necessary actions to collect payments.

Step 2: Review Accounts Payable

• If you enter bills in QuickBooks, check your Accounts Payable (A/P) by generating the A/P Aging Report.
• This report will show you what bills need to be paid and help you manage cash flow effectively.

Step 3: Handle Petty Cash

• If your business maintains a petty cash fund, ensure that all transactions are recorded accurately.
• Reconcile petty cash by comparing the records to the actual physical cash on hand.

Step 4: Reconcile Accounts

• Reconcile your bank accounts in QuickBooks.
• Ensure that your recorded transactions match the bank statements for the month.
• This step is crucial for identifying any discrepancies or unrecorded transactions.

Step 5: Generate Financial Reports

• Create your monthly financial reports to assess the business’s performance:
  • Profit and Loss Report
  • Balance Sheet Report
• These reports provide insights into your income, expenses, and overall financial health.

Step 6: Set Closing Dates

• Set a closing date in QuickBooks to prevent any unauthorized changes to the financial data of the closed period.
• This is essential for maintaining the integrity of your financial records.

Step 7: Verify Loans and PayPal Accounts

• Review any outstanding loans and ensure they are accurately recorded.
• If you use PayPal, set it up as a separate bank account in QuickBooks to track transactions effectively.

Step 8: Process Payroll Taxes

• Check and process payroll taxes to ensure compliance.
• Follow these three steps:
  • Confirm all payroll entries are correct.
  • Calculate the total payroll taxes due.
  • Submit the taxes to the appropriate authorities.

Step 9: Review Inventory

• Check if any clients have inventory on hold for tracking purposes.
• This step ensures that your inventory records are accurate and up-to-date.

Conclusion

By following these steps, you will establish a consistent process for closing your books each month using QuickBooks. Regularly reviewing your financials and ensuring accuracy will lead to better decision-making for your business. For further learning, consider joining workshops or subscribing to QuickBooks tips. Stay organized, and your month-end closing will become a more manageable task.