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How To Do Month End

Month-End Procedures
For the Work From Home Business Owner

In this article, I will chat about how to perform month end procedures for a small work at home business. I'll begin by giving an overview of what happens in large companies, then move on to small business procedures.


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Month end is a big deal in large companies. Everyone works through their bookkeeping checklist, scrambling to get all their entries booked by the last working day of the month.

Then the first three working days are spent scrutinizing the P&L (profit and loss) and A&L (assets and liabilities) accounts and booking adjusting entries.

Once these are booked, another run is performed so that preliminary financial statements can be given to management to review.

More adjusting entries are booked and the final run is made ... final financial statements are issued and the ledger is closed for that month ... by the fifth working day ... when the financial planning department swings into action ... reviewing and revising the business plan.

Each person keeps copies, in their offices, of their own journal entries with backup along with their reports which are filed in binders with monthly tabs. One binder contains the general ledger (GL), another the financial statements (FS), and another the journal entries that they booked with their backup. The binders are great to look up information if the system is down ... or management asks a question.

If an account is complicated enough, an excel spreadsheet is created to show how the account works with a month by month analysis. These spreadsheets save the company money as they help the external accountants do the year-end audit.

Any errors found now that relate to that month must be booked as a correcting journal entry in the current month.

But how do you do month end for a small business that operates out of their home? It is basically the same ... but there is more wiggle room on your dates.

The important thing is to have a month-end process and perform it every month. If you start the procedures now, while your business is still small, you won't have to scramble as your business grows ... and you'll be comfortable handing over tasks that you are now comfortable and familiar with ... allowing you to supervise and manage the financial area with ease.

If you are a goal oriented person, as many small business owners are, you might think of these procedures as month end goals.

I'm going to suggest that your month end process does not have to be perfect ... but at the end of each quarter, you take the time to do a really thorough job. Why?

  • You are filing your GST report and you want it right ...
  • It will make your year end go more smoothly (and therefore less costly) ...
  • You will be on top of any problems ... being proactive instead of reactive.

It's a nice spring day here so I'm going to switch my beverage from tea to lemonade. :-) So pull up a chair and let's get started ... shall we.


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Assumptions

First off, I'm going to keep this simple and assume you are a small business working from your home, with minimal to no inventory. This means I'm also going to assume no separate systems that need to be integrated (no summary entries posted).

I am not going to explain how to book any adjusting entries just yet ... which are the types of entries your bookkeeper or accountant would likely book.

I will cover how to "fix" some software use problems ... that you discover while doing your month end ... in a separate upcoming article.

My main goal here is to keep this very simple for you and give you a method to self-assess how your bookkeeping is going.

Your main goal is accurate and timely financial statements that you can use to run your business and reduce your accounting costs.


Month End Procedures

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You May Also Be Interested In

Going To Bookkeeping Checklists

Going To Common Bookkeeping Entries

Returning to The Practice

Returning to Home Page from Month End



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