Checklist of daily business accounting tasks

Checklist of accounting

When it comes to daily accounting business needs, you have a pretty light plate. You have plenty of financial statements to review every week, month, quarter, and so on, but your daily business accounting responsibilities consist of the following:

1.Check cash position

Since cash is the fuel for your business, you never want to be running on or near empty. Start your day by checking how much money you have. Knowing how much you expect to receive and how much you wish to pay during the upcoming weeks and months is essential, too.

Weekly accounting tasks

Weekly accounting tasks are a little more involved. Welcome to your weekly accounting tasks, otherwise known as the land of invoicing, financial data management, and other business bank account fun.

This is where having a great accounting system pays off. So, put on your accounting cap and get ready to dive into the heaviest of heavy financial management.

2.Record transactions

Record each transaction (billing customers, receiving cash from customers, paying vendors, etc.) daily or weekly, depending on volume. Although recording transactions manually or in Microsoft Excel sheets is acceptable, it is probably more comfortable to use small business accounting software like QuickBooks. The benefits and control far outweigh the cost.

3.Document and file receipts

Keep copies of all invoices sent all cash receipts (cash, check, and credit card deposits), and all cash payments (cash, check, credit card statements, etc.).Start a vendors file sorted alphabetically for easy access. Create a payroll file sorted by payroll date and a bank statement file sorted by month. A common habit is to toss all paper receipts into a box and try to decipher them at tax time. Still, unless you have a small volume of transactions, it’s better to organize separate files for assorted receipts as they come in. Many accounting software systems let you scan paper receipts and avoid physical files altogether.

4.Review unpaid bills from vendors

Every business should have an “unpaid vendors” folder. Keep a record of each of your vendors that includes billing dates, amounts due, and payment due dates. If vendors offer discounts for a yearly fee, you may want to take advantage.

5. Pay vendors

Track your accounts payable, and have funds earmarked to pay your suppliers on time, so you avoid late fees and disgruntled associates. Suppose you can extend payment dates to net 60 or net 90, all the better. Whether you make payments online or drop a check in the mail, keep copies of invoices sent and received using accounting software to make things easier during tax time.

6.Prepare and send invoices

Be sure to include payment terms. Most invoices are due within 30 days, noted as “Net 30” at the bottom of your invoice. Without a due date, you will have more trouble forecasting monthly revenue. To make sure you get paid on time, always use an invoice template. Read more about the anatomy of an invoice and how to get delivered on time.

7.Review projected cash flow

Managing your cash flow is critical, especially the first year of your business. Forecasting how much cash you will need in the coming weeks and months will help you reserve enough money to pay bills, including your employees and suppliers. Plus, you can make more informed business decisions about how to spend it.

All you need is a simple statement showing your current cash position, expected upcoming cash receipts, and expected cash payments for this period. To download a free customizable cash flow statement template, click here.

Monthly accounting tasks

Whether you have a seasoned or new business, brick and mortar or eCommerce, there are numerous monthly accounting tasks you need to handle.

8.Balance your business chequebook

Just as you reconcile your personal checking account, you need to know that your cash business transaction entries are accurate and that you are working with the correct cash position. Reconciling your cash makes it easier to discover and correct any errors or omissions — either by you or by the bank — in time to fix them.

9.Review past-due receivables

Be sure to include an “ageing” column to separate “open invoices” by the number of days a bill is a past due. This gives you a quick view of outstanding customer payments. The beginning of the month is an excellent time to send overdue reminder statements to customers, clients, and anyone else who owes you money.

At the end of your fiscal year, you will be looking at this account again to determine what receivables you will need to send to collections or write off for a deduction.

10.Analyse inventory status

Suppose you have inventory, set aside time to reorder products that sell quickly and identify others that are moving slowly and may have to be marked down or written off. If you check regularly (and comparing to prior months’ numbers), it’s easier to make adjustments, so you are neither short nor overloaded.

11.Processor review payroll and approve tax payments

While you have an established schedule to pay your employees (usually semi-monthly), you need to meet payroll tax requirements based on federal, state, and local laws at different times, so are sure to withhold, report, and deposit the applicable income tax, Social Security, Medicare, and disability taxes to the appropriate agencies on the required dates.

Review the payroll summary before payments are disbursed to avoid making corrections during the next payroll period. A payroll service provider can do all this to save you time and ensure accuracy at a reasonable cost. You can also use our free paycheck calculator to figure out what you need to withhold from each paycheck.

12.Review actual profit and loss vs budget and prior years

Your profit and loss statement (also known as P&L or an income statement), both for the current month and year-to-date, tells you how much you earned and how much you spent. Measure it against your monthly or quarterly budget. Comparing your actual numbers to your planned numbers highlights where you may spend too much or not enough.

If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period, year-to-date income statement to identify variances and make adjustments.

13.Review month-end balance sheet vs prior period

 By comparing your balance sheet at one date — June 30, 2015, for example — to a balance sheet from an earlier date — December 31, 2014 — you get a picture of how you are managing assets and liabilities. The key is to look for what is significantly up and/or down and understand why. For example, if your accounts receivable are up, is it due to increased recent sales or because of slower payments from customers?

Quarterly accounting tasks

As Benjamin Franklin almost said, “…in this world, nothing can be said to be certain, except tax season and the importance of thorough bookkeeping.” (Take my word for it and don’t fact-check that quote.)

The quarterly accounting tasks primarily deal with the significant picture elements of running a small business or being self-employed: tax estimates, quarterly payments, and a constant reminder that you need a great accounting solution.

14.Prepare revised annual P&L estimate

It’s time to evaluate how much money you are making, whether your net assets are going up or down, the difference between revenues and expenses, what caused those changes, and how you spend profits. While you’re at it, identify trouble spots, and make adjustments to improve sales and margins.

15.Review quarterly payroll reports, and make payments

You have been reviewing your semi-monthly payroll reports. However, the IRS and most states require quarterly payroll reports and any remaining quarterly payments. Again, it’s best if your payroll service provider completes these reports and files them. Your job is to review to make sure they appear reasonable.

16.Review sales tax and make quarterly payments

If your company operates in a state that requires sales tax, make sure you comply to avoid severe penalties. The U.S. Small Business Administration (SBA) can help you determine your state tax obligations.

17.Compute the estimated income tax and make payments

The IRS collects income taxes, as do most states. Review your year-to-date P&L to see if you owe any estimated taxes for that quarter. Your tax accountant can assist if necessary.

Annual business accounting tasks

Once a year, you celebrate a few things: your birthday, significant anniversaries, and probably some holidays. You likely don’t have “inventory review” or “tax filing” on your list of things to celebrate, but they’re still important — especially when we’re talking about annual accounting tasks.

 18.Review past-due receivables

Now, it’s time to check significant past due to receivables and decide whether you think customers will eventually pay, whether to send past due bills to a collection agency, or whether to write them off for a deduction.

 19.Review your inventory

Review your current inventory to determine the value of items not sold. Any write-down of inventory translates to a deduction on your year-end taxes. If you do not write down unsellable inventory, you are overstating your inventory balance and paying additional taxes that you don’t owe.

20.Fill out IRS forms W-2 and 1099-MISC

The IRS has a January 31 deadline for reporting the annual earnings of your full-time employees (W-2s) and most independent contractors (1099s). This deadline includes mailing copies of the tax forms to the people who worked for you. Note: A 1099 way is not required for contractors who earned less than $600. Consider saving time and avoiding errors with an e-filing service.

For help determining whether your worker is an independent contractor or an employee, see our W-2 vs 1099 Wizard. If you employ independent contractors or freelancers, check out our guide to filing 1099s.

21.Review and approve full-year financial reports and tax returns

At tax time, carefully review your company’s full-year financial reports before giving them to your accountant. Before you sign your return, be sure to check it for accuracy based on your full-year financial statements. If the IRS audits your company and finds any underpayment of taxes, it will come to you, not your accountant, for any additional taxes, penalty and interest.