Small business bookkeeping means recording every dollar in and out, reconciling those records to your bank and card statements, and closing the books each month so the reports are right. Use cloud software, keep business and personal money in separate accounts, and run the checklist below every month. Taxes and decisions then rest on numbers you can trust.
The checklist at a glance
| How often | Task | Why it matters |
|---|---|---|
| Weekly | Categorize new bank and card transactions | Small batches are faster and more accurate than a month at once |
| Weekly | Save receipts and invoices to the matching transaction | Proof for deductions and audits |
| Weekly | Send invoices and follow up on overdue ones | Cash comes in sooner |
| Monthly | Reconcile every bank, card and loan account to its statement | The only way to know the books match reality |
| Monthly | Review the “uncategorized” and “ask my accountant” accounts until empty | Hidden errors live here |
| Monthly | Review accounts receivable and accounts payable aging | Spot slow payers and bills you missed |
| Monthly | Tie payroll expense to the payroll register | Catches missing or doubled payroll entries |
| Monthly | Record sales tax collected and compare to the return | Sales tax is your customers’ money, not yours |
| Monthly | Run and read the profit and loss and balance sheet | Decisions need current numbers |
| Quarterly | Check estimated tax with your CPA | Avoid underpayment penalties |
| Quarterly | Confirm Form 941 deposits match the return | Payroll penalties are expensive |
| Quarterly | Review contractor totals for 1099 tracking | Avoid a January scramble |
| Year-end | Collect missing W-9s; prepare 1099 and W-2 data | Due early in the new year |
| Year-end | Count inventory and list fixed asset purchases, if any | Your CPA needs both for the return |
| Year-end | Send the CPA a closed, reconciled set of books | A cheaper, faster tax return |
Before you start: the setup that makes the checklist work
- Separate accounts. Open a business checking account and use one card only for business. Mixing personal and business money is the single biggest source of bookkeeping cost.
- Pick cloud software. QuickBooks Online and Xero are the most common for US small businesses and work with most bookkeepers and CPAs. Connect bank feeds so transactions import automatically.
- Set up a simple chart of accounts. The list of categories should match how your CPA files your return. You can start from our free starter chart of accounts (CSV) and adjust it with your CPA. It includes notes on which accounts to reconcile and when to use them.
- Decide on cash or accrual. Most very small businesses keep books on a cash basis. If you carry inventory, invoice customers or have larger revenue, your CPA may require accrual. Ask before you set up.
The monthly close, step by step
Run this once your bank and card statements for the month are available.
- Finish categorizing. Every transaction in the month gets a category. Anything you can’t place goes to a temporary “ask my accountant” account, never to a random expense.
- Reconcile. In your software’s reconcile tool, match the ending balance of each bank, card and loan account to the statement. The difference must be zero. If it isn’t, look for duplicated, missing or wrongly dated transactions.
- Clear the holding accounts. Uncategorized income, uncategorized expense and “ask my accountant” should be empty at month end.
- Record what bank feeds miss. Loan payments split into principal and interest, owner draws, payroll from an outside provider, and any cash spending.
- Check sales tax. Sales tax collected should sit in a liability account, not in sales. Compare the balance to the return you are filing for the period.
- Check payroll. Gross wages and employer taxes in the books should match the payroll register for the month.
- Review the reports. Compare this month’s profit and loss with last month and the same month last year. Large swings usually mean a miscategorized transaction, not a business change.
- Lock the period. Most software lets you set a closing date with a password so old months can’t be changed by accident.
A clean monthly close takes a few hours for most small businesses with up to a few hundred transactions. Behind books take much longer, which is why the weekly habit matters.
Texas, Georgia and Colorado notes
| State | What to add to your checklist |
|---|---|
| Texas | State sales tax is 6.25% plus local tax up to a combined 8.25%. File on the schedule the Comptroller assigns. The annual franchise tax report is due May 15, even when no tax is due; see Texas franchise tax: no tax due still means file. |
| Georgia | State sales tax is 4% plus local taxes. LLCs and corporations file an annual registration between January 1 and April 1; see Georgia LLC annual registration. |
| Colorado | State sales tax is 2.9%, but many home-rule cities collect their own tax and need a separate return; see Colorado state-collected vs home-rule sales tax. |
For federal payroll dates see the Form 941 and 940 due dates, and for contractors see the 1099-NEC threshold for 2026. The compliance calendar puts all three states and the federal dates on one page.
How long to keep records
The IRS says to keep records that support income, deductions or credits until the period of limitations for that return runs out, which is generally 3 years after you file. Keep employment tax records for at least 4 years. Some situations need longer: 6 years if income was substantially underreported, and 7 years for a claim for a loss from worthless securities or a bad debt deduction. Keep records for property until the limitations period expires for the year you sell or dispose of it. Your state may have its own rules, so ask your CPA.
Signs you should get help
- You are more than two months behind on reconciliations.
- Your CPA charges extra every year to clean up the books before the return.
- Sales tax returns are filed from estimates rather than from the books.
- You don’t know your profit for last month without waiting for the tax return.
- Bookkeeping takes your evenings and weekends.
If several of these apply, see what outsourced bookkeeping includes and costs, or how to hire an outsourced bookkeeper. RazaPro’s bookkeeping support runs this monthly close for you from $75 per month.
This article is general information, not tax, legal or accounting advice.
Last updated October 3, 2026.