6 Key Monthly Bookkeeping Tasks

Okay, so bookkeeping might seem like the least glamorous task to add to the list of things every small business owner should do, but staying on top of your finances is essential.

Here are my top 6 monthly bookkeeping tasks.

Check your bank balance 

While it may appear rudimentary, vigilantly monitoring your bank balance transcends mere checking; it's an integral part of your financial management toolkit. Understanding your cash position at any given moment is not just advisable - it's imperative.

Modern technology has simplified this task considerably. With the advent of mobile banking, you can now review your bank balance and recent transactions with just a few taps on your smartphone. This immediate access allows for prompt decision-making and financial adjustments as needed.

Consider integrating your bank account with bookkeeping software such as QuickBooks or SageOne for a more streamlined approach. This not only automates the process of tracking your transactions but also ensures that your financial records are always up to date. Upon logging into your bookkeeping software, you're presented with a clear snapshot of your financial activities, with transactions neatly recorded and categorized for easy analysis.

This simple task can offer profound insights into your business's financial health. Regular monitoring lets you spot trends, manage cash flow more effectively, and avoid potential overdrafts or unexpected shortfalls. It's a crucial step in maintaining a solid financial foundation for your business.

File your records 

The meticulous filing of invoices and receipts is more than a mere administrative chore - it's a critical practice that safeguards your financial narrative. The digital era offers many options for managing these documents efficiently, transforming what was once a daunting task into a streamlined process.
Transitioning to electronic filing declutters your physical workspace and enhances accessibility and security. Start by digitizing any paper documents by scanning them. This initial step converts your tangible records into digital files, ready for organization and storage.

Leveraging online accounting software becomes a game-changer in managing these digital files. Platforms like QuickBooks or SageOne feature capabilities that allow you to directly attach each electronic invoice or receipt to its corresponding transaction. This integration simplifies record-keeping and facilitates a more seamless audit process, ensuring that the appropriate document substantiates every financial entry.

For further organization, consider creating digital folders on your computer or in your cloud storage space, categorizing them by month. This method aids in swift retrieval and review, allowing for a more coherent understanding of your financial transactions over time. The key to this system's success is consistency in filing and a commitment to regular updates.

Cloud storage services like Dropbox offer a robust solution for backing up your financial records. They provide a secure and off-site repository for your data and ensure your records are accessible anywhere. Opting for cloud backup is not just a matter of convenience; it's a strategic choice for disaster recovery, ensuring that your business can swiftly rebound from physical damages to your premises or hardware failures.

Recording transactions 

Using software makes life easy, especially if you use the software to download your bank transactions automatically.  If you aren’t using software, then you still need to have a method of summarising your monthly sales and expenses.  You can do this by using a simple spreadsheet or book-keeping journal.  This task can often be outsourced to a bookkeeper, accountant or admin assistant.  The key is to keep this bookkeeping task up to date so that it doesn’t become too onerous and time-consuming. 

Profits and Tax 

Understanding your business's financial health extends beyond mere revenue generation; it necessitates a thorough analysis of your profits and tax obligations. This critical assessment empowers you with the knowledge of your operational success and prepares you for future tax responsibilities.

Monthly profit calculation serves as a financial barometer for your business. It illuminates the effectiveness of your strategies and pinpoints areas needing improvement. To ascertain your monthly profit, deduct your total expenses from your revenue. This calculation reveals your business's actual earnings after covering all operational costs, clearly showing your financial performance.

Beyond understanding your profit margins, it's essential to strategize for tax liabilities. Taxes are an inevitable aspect of running a business, and proactive planning is critical to managing them effectively. One practical approach is to allocate a portion of your monthly profits to a designated tax savings account. This account should be separate from your operational funds to ensure your tax obligations are met without impacting your daily business activities.

Calculating your tax liability accurately requires a comprehensive understanding of taxable income and applicable tax rates. Consider leveraging accounting software or consulting with a tax professional to estimate the monthly amount you should set aside. This foresight ensures compliance with tax regulations and safeguards against unexpected financial strain during tax season.

A diligent approach to monitoring your profits and preparing for tax liabilities provides insight into your business's financial well-being. It secures your compliance and readiness for tax obligations. Making these practices a staple in your monthly financial review allows you to position your business for sustained growth and stability.

Review your financial performance 

A thorough financial performance review is essential for any small business aiming to survive and thrive. This process goes beyond mere number-crunching; it involves strategically examining your business's financial health and operational efficiency. Whether you're leveraging the expertise of an accountant or undertaking this analysis yourself, gaining deep insights into your financial data is crucial for informed decision-making.

Partnering with an accountant can add significant value to this review. They bring a professional eye to your financial statements, offering nuanced interpretations and actionable advice tailored to your business's unique context. An accountant can help identify trends, benchmarks, and opportunities for optimization that might take time to become apparent. Their expertise can uncover underlying strengths or vulnerabilities within your financial strategies, providing a roadmap for future growth or areas requiring immediate attention.

Independently or alongside your accountant's insights, delve into the core components of your financial landscape - your income, expenses, profit margins, and cash flow dynamics. This analysis should answer critical questions about your business's profitability, cost efficiency, revenue streams, and liquidity. By closely examining these elements, you can pinpoint which aspects of your business drive success and which areas may hold you back.

Identifying these financial patterns and their implications is not just about rectifying shortcomings; it's about capitalizing on what works well. This might involve reallocating resources to high-performing areas, adjusting pricing strategies, cutting unnecessary costs, or exploring new revenue opportunities.
A proactive and regular review of your financial performance lays the foundation for dynamic business management. It enables you to adapt swiftly to market changes, optimize your financial strategies, and steer your business towards sustainable success. Remember, the goal of this review is not just to understand where your business stands today but to inform you where it could go tomorrow.

Plan for the next month 

Effective business management demands reflection and forward-thinking - especially regarding budgeting and strategic planning. Your financial performance review serves as a critical tool for understanding past and present operations and shaping future actions. As such, your planning process should embody flexibility, allowing for adjustments based on the latest financial insights and emerging business trends.

As you analyze your financial performance each month, new opportunities and challenges will inevitably surface. This continuous cycle of review and adaptation ensures that your business remains agile and responsive to change. For instance, if your review uncovers a solid performance in a specific product line or marketing channel, it may warrant a strategic reallocation of resources to capitalize on this momentum. Conversely, areas where sales are lagging may require a revised approach or reduced investment.

The planning phase is your opportunity to translate these insights into actionable strategies for the coming month. This could involve shifting your marketing budget to double down on successful campaigns, exploring new markets, or even pivoting your sales strategy to address a newly identified customer need.