Accounting and Bookkeeping Checklist
What To Do and When

For The Work From Home Business Owner

Checklists are handy. I find bookkeeping checklists are really handy, especially when you are working at home on the book keeping for your business.

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I have put together this quick article, an overview really, on some small business accounting and bookkeeping tasks that should be done during the year ... to help ensure your year-end will be a breeze.

If I make reference to QuickBooks® in this article, I won't necessarily tell you exactly how to perform the task. For the purposes of this article, I am going to assume you are proficient with QuickBooks®. If this is not the case for you ... you have four options:

1. Get professional help.
2. Learn to use QuickBooks® Help menu.
3. Take a course on QuickBooks® in your local area.
4. Ask your question on the Bookkeeping Essentials Learning QuickBooks® forum page

... mmm that's a little blunt isn't it? Sorry I'm tired. I've been studying for my tax course and my Certified Professional Bookkeeper's exam. (Update May 2010 ... I passed both! :0))

As this site grows, I'll work in more detail ... most likely in a separate article.

Now let's get started ... so take a sec and warm up your tea cup.

I have categorized the tasks into six different bookkeeping checklists:

• the daily bookkeeping checklist
• the weekly bookkeeping checklist
• the monthly bookkeeping checklist
• the quarterly bookkeeping checklist
• the annual bookkeeping checklist (updated December 28, 2011)
• the year-end bookkeeping checklist

If you want a checklist on what to hand over to your bookkeeper or accountant, the list I drew up in Small Business Bookkeeping Questions and Answers may help.

Daily Bookkeeping Tasks

• Design your billing procedures so that you invoice your customers immediately upon completion of the sale or service.
• If you don't track your customers on an individual basis because you have a cash register, prepare your Daily Sales Summary.
• If you use QuickBooks®, your customer is named "Cash Register Sales" or something like that. Enter your amounts from your daily till report using the Sales Receipt form. Make sure you post your bank deposit to the Undeposited Funds account.
• Make bank deposits on the same day as you receive the payments (or the next day if you are using the portable file organization system for your vehicle).
• Deposit the whole amount as it gives you an audit trail and makes doing your reconciliations easier. Do not take some cash for yourself. If you need cash, write yourself a cheque.
• If you must keep some cash back from a deposit and you use QuickBooks®, use the cash back box at the bottom of the Make Deposit screen. Record the whole cash amount received through the Undeposited Funds screen, then record the cash taken at the bottom. Make sure you complete all the fields, including the memo field explaining what or who the cash was for.
  
• Make sure you include the cheque number and date of any cheques you received on the deposit slip ... or you can use a payment log where your record this information. Also check that the address on the cheque matches the address on your invoice. You'll need this information when you go to enter the payment into your bookkeeping program.
• Upon returning from the bank, match and staple the bank deposit receipts received to the customer invoices. (Or you can do this task when you sit down to do your data entry.)
• Setup your small business accounting system so you update and monitor your cash flow forecast every day. I like to do it in the morning before the day's interruptions begin.
• Backup your data. This is a very important task on your bookkeeping checklist ... so please don't skip it. For 2011, consider offsite "cloud" storage options. You can find a list of storage options to investigate at windows7inthenews.com/#CloudStorage.

Weekly Bookkeeping Checklist

• Set aside time (actually block out the time on your calendar) once a week (once a month is the bare minimum), to do your data entry along with your filing.
• Staying organized and on top of your paperwork makes the task easy ... falling behind makes it a chore.
• If you are always behind on your paper work, this portable filing system just might work for you.
• After you have processed all your paperwork, print an aged accounts payable (AP) report and decide which bills, if any you need to pay.
• Establish a priority list for your accounts payable payments.
• Set AP policies like paying invoices only on the due date and not before ... and stick to them. Consider what your policy for purchase discounts is ... if you are short of cash, should you borrow to take advantage of it ... or not?
• Remember, if you can't afford to pay all your bills, consider making partial payments to make your money go farther and keep your credit rating intact.
• When you are finished entering your data, remember to backup your data. It's a good idea to do this before you start your data entry as well.
• It is a good practice to establish accounts receivable collection procedures and follow them faithfully.
• Schedule time to become friends with your Aged Accounts Receivable Report and perform the accounts receivable collection procedures to keep your cash flow running smoothly.

Monthly Bookkeeping Checklist

• Send customer statements out each month for overdue accounts.
• Book any earnings and/or interest on investments and receivables.
• Review your Other (Miscellaneous) Income and Other (Miscellaneous ) Expense accounts and reclassify entries where appropriate.
• Block out time each month to reconcile your bank statements, credit card statements, and vendor statements.

• Learn why reconciliations are important and how to do an account reconciliation here.
• Try each month to do your month-end processing following the procedures set out in the article How to do Month-End.
• Doing this task quarterly is the bare minimum.
• If you have a bookkeeper, it is very important that you perform your Monthly Financial Review to reduce the likelihood of fraud.
• An added benefit to you will be that you become comfortable and knowledgeable about the financial health of your business.
• If your computer has automatic backups, make a separate backup copy to a USB drive. This is a very important task on your bookkeeping checklist ... so please don't skip it.

Quarterly Bookkeeping Checklist

• Each quarter, file your GST/HST report on form GST34-2. If you are filing annually, you may want to consider reading about other alternatives. If your reporting period is monthly, move this task to your monthly checklist.
• If you have provincial sales tax, payroll taxes, or workers' compensation, remember to always file these reports on time to avoid late penalties.
• Do a physical inventory count on items that have a large dollar value. Book an adjusting entry as necessary.
• If you are using a computer software program, restore a data backup file (be careful to name it something other than your current file in use).
• Your objective is to test and ensure it restores properly. You'd hate to find out it is not working when you really need it!
• This is a very important task on your bookkeeping checklist ... so please don't skip it.

Annual Bookkeeping Checklist
Updated December 28, 2011

This bookkeeping checklist is NOT complete nor comprehensive. I will add to it over time. It contains a lot of housekeeping tasks.

I don't know about you but they aren't my favorite tasks ... so I tend to do them when I see the need ... which is why I will have to add to this list on an ongoing basis.

Some of the tasks must be done as part of your year end procedures.

• Perform a physical inventory count on the last day (or as close as possible to the last day) of your fiscal year. You will need this information for your year-end.
• Don't forget to deal separately with items that are obsolescent OR were used for demonstration samples and giveaways.
• Prior to the end of your fiscal year, record all your petty cash disbursements and replenish your petty cash if you haven't been doing it on an ongoing basis throughout the year.
• Reconcile every balance sheet account to a third party source document.
• If you have been doing your monthly financial review, you will have been accomplishing this task on an ongoing basis throughout the year ... so you can be proactive in identifying and correcting any problems early on. :0)
• If you haven't been doing your monthly financial review, roll up your sleeves ... because you have a lot of work ahead of you. :0(
• Record any year-end adjusting entries while you are reconciling all of your balance sheet accounts.
• It's especially important to ensure the bank and credit card statements accounts have been formally reconciled to the end of your fiscal year - December 31 for sole proprietors.
• Most small business owners complete their books for daily transactions up to the last day of the fiscal year. They also reconcile all their accounts at year-end ...
• ... then their bookkeeper or accountant determines the year end adjusting entries required. As your small business accounting records are going to be used to file your tax return, it's important to have your work reviewed by a professional. Here's a list of what your accountant will need.
• Look at your Undeposited Funds account. The only deposits showing here at the end of your fiscal year should be money received from customers that did not get deposited in the bank until the new year.
• Run your Accounts Receivable report.
• Consider sending any amounts outstanding over 90 days to a collector. If you wait too long, it will be more difficult for them to collect.
• Apply any outstanding credits on customers' accounts to open invoices.
• In QuickBooks®, you do this through Receive Payments ... where you Apply Credits through the Discounts & Credits button.
• Clean up your miscellaneous over and under payments by journalling them to your miscellaneous income account OR directly to your sales revenue account ... and make a note to the accountant who does your year-end.
• Run your Accounts Payable report.
• Clean up your miscellaneous over and under balances ... and make a note to the accountant who does your year-end.
• Every vendor balance should balance to the vendor's statement. Any differences should show on the vendor reconciliation.
• Most payroll service companies put out year-end payroll checklists and guides. Adapt the information from these specialists for your own business ... to make sure you have crossed all your t's and dotted all your i's.
• Ceridian's website has a Canadian Year-End Customer Guide for Small Business and a Year-end Payroll Checklist. Sometimes they change their link, so I won't give you live links. The last time I looked, the guide was located under resources and tools at www.ceridian.ca/en/resources-tools/yearend/2011/small_business_yearend_customer_guide.pdf while the year-end checklist was located at www.ceridian.ca/guide/hr-payroll/year-end-checklist.html. Sometimes they move it around ... so you may have to hunt a bit. :o)
• ADP has a U.S. Year-end Payroll Checklist. You should be able to find it at www.adp.com/tools-and-resources/compliance-connection/payroll-resources/year-end-checklist.aspx.
• Before you hand over your information to your tax preparer, run a comparative set of financial statements. Check that last year's numbers match what was reported on the financial statements attached to your tax return filed with CRA.

• If something is different, track it down. If you don't, the person preparing your tax return will have to charge you to figure out the problem. (If your books are prepared on a GAAP or ASPE basis, there will be some timing differences on tax return information so make sure you are comparing to your financial statements not the actual tax return.)
• If you closed your books properly, then last year's information should match.
• Take some time before you begin your new fiscal year to review your chart of accounts and clean it up.
• If you are no longer using a particular account because you sold the asset or paid off the loan, in QuickBooks® you can make the account "inactive". The balance should be zero before you do this.
• If you find two accounts set up to track the same expense, in QuickBooks® you can merge duplicate accounts ... but make sure you know what you are doing so you don't overwrite and lose valuable data.
• If an account was setup and never used, in QuickBooks® you can delete it. Once the account has been used, this option is no longer available. You also can't delete an account that has a sub-account attached to it or an item assigned to it. You must reassign the sub-account or item first.
• If you use QuickBooks, take some time before you begin your new fiscal year to review your customer and vendor lists.
• Clean the lists up by inactivating dormant vendors or lost customers ... or merging duplicates. Again, be careful when you use the merge command. It is irreversible, so double check before you hit ok.
• Review your system needs to determine if your accounting system needs upgrading ... if you've had a great year, you may have outgrown your system ... or perhaps your current system is too large for the volume of transactions you have.

Year-end Bookkeeping Checklist

This is a general year-end bookkeeping checklist list. Every set of books is different ... so year end procedures requires judgement. Any bookkeeping entries listed here should not be booked by someone doing their own books ... unless you have discussed this with your accountant ... or the accountant gave you the entries to post so you can close your books for the year.

I include this bookkeeping checklist only to give you an idea of what a certified professional bookkeeper or accountant will be doing. If you try to do this yourself, and don't have the proper knowledge, it will just cost you more to hire someone to try and figure out what you did and how it can be corrected. :0(

This bookkeeping checklist assumes QuickBooks® software is being used. If this is not the case, other tasks / entries may be required.

• Do the bank and credit card balances match the bank statements? Have they been formally reconciled? Is there a balance in Undeposited Funds? Are these amounts listed on the bank reconciliation? Has petty cash been replenished? Have any cash clearing / suspense accounts been reviewed, reconciled and reclassified where necessary?
• Run the Accounts Receivable report.

• Review the balances to see if any write-offs of accounts (to the allowance for doubtful accounts not the bad debt expense account) needs to be booked.
• Take a look at the Allowance for Doubtful Accounts. Is it a fair estimate of what has the potential to be uncollectable?
• Have the prepaid expenses been adjusted to reflect the portion that was consumed during the past fiscal year? Has the insurance and rent expense accounts been analyzed to make sure they do not contain any amounts that pertain to a future period ... a period after the last day of the fiscal year?
• Was an inventory count taken on the last day of the fiscal year? Were amounts booked for obsolescence or samples?
• Take time to review the capital assets and intangible assets. Have all the capital purchases made during the year been recorded? Have all the sales of assets including the gain / loss been recorded ... correctly? Has the correct amount of amortization expense been booked? Were partial year amounts booked for any additions and disposals? Has the amortization for intangible assets like goodwill or a franchise license been booked?
• Run the Accounts payable report.
• Review the balances for amounts outstanding longer than 48 months (two years). As a general rule, bring these amounts back into income ... but there are always exceptions.
• Have all of the outstanding accounts payable been recorded?
• In general, the payroll, income and sales tax liability accounts should match what was reported to and filed with CRA and/or provincial government.
• Do the loan accounts balance to the lenders' statements? Has the correct amount of interest been expensed? Has all the debt outstanding been recorded, including owner's loans? Were the entries made for any matured or forgiven long term debt? Have the bookkeeping entries been made for any new debt that was taken on during the fiscal year? Has the current portion of the long term debt been revised to reflect the up coming year?
• Have all the owner's draws and contributions during the year been properly recorded? Has the closing bookkeeping entry transferring owner's draws and owner's contributions to the owner's equity account been entered?

Did you notice? ... all that is happening here is that every account is being reviewed for accuracy and completeness ... adjusting bookkeeping entries are being recorded based on the account analysis and GAAP/ASPE standards.

... So you can see where there would be a problem if you are trying to do year-end when you don't know / understand the accounting standards ... or understand the process, can't you?

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Make An Appointment With Yourself To Complete Your Bookkeeping Checklist - Yes ... Actually Schedule It

If you work through these bookkeeping checklists and actually do these small business accounting tasks faithfully, preparing for year-end will not be an onerous task.

You can make it easier on yourself by actually scheduling time to perform these small business accounting tasks just as you would any other task in your business.

Making the appointment with yourself will make it more difficult to put aside the task. If you are consistent with the timing, it will become a habit very quickly. Each time you complete one of the bookkeeping checklists, they become easier to do ... especially if you stay on top of it.

Okay, now I have to come clean. Do I always get all these tasks done on the bookkeeping checklists when I say they should be done?

Ah, that would be a big, fat no. :0(

Sometimes I just don't have time ... but I do chip away at each bookkeeping checklist ... so that come year-end, I've got everything done that needs to be done.

Do you want your year-ends to be a breeze? Then you need to get around to doing these accounting and bookkeeping tasks throughout the year too.

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