Tax preparation is generally easier when accounting is kept organized throughout the year. The goal of monthly bookkeeping is to ensure your financial information is clear before tax season arrives.

Bank and card reconciliations

Confirm that each account is reconciled up to the latest available statement. An unresolved discrepancy can affect multiple categories and reports.

Uncategorized transactions

Review any pending transactions and request clarification when the purpose is unclear. Leaving many transactions in generic accounts reduces the usefulness of the reports.

Customer payments and open invoices

If you use invoices in QuickBooks, verify that payments are applied to the correct invoice and check for balances that remain open even though the customer has already paid.

Loans and credit cards

Loan payments typically include several components and shouldn't be automatically treated as a standard expense. It's important that the related accounts are set up and reviewed correctly.

Main reports

Before closing the month, review at least the Profit & Loss and Balance Sheet. Very large changes, unexpected negative balances, or accounts that grow without explanation may indicate that something needs review.

Documentation

Keep bank statements, invoices, important receipts, and documents related to loans, payroll, or other relevant transactions. Your tax preparer may need additional documentation depending on your situation.

This article provides general information on accounting organization and is not a substitute for tax or legal advice. Specific obligations depend on each business and should be reviewed with the appropriate professional.