A 10-point month-end closing checklist for small shops

Month-end closing isn't only for tax. It's the best moment to catch mistakes before they pile up. A few hours once a month buys you numbers you can trust all year.

Before you start: have three things ready

• Bank statements for every account the shop uses
• Your income and expense log for the month
• Receipts, invoices and payment slips

The 10-point checklist

1. Record everything first. Look for any bill, slip or transfer you haven't entered yet.
2. Reconcile the bank. Your log's closing balance must match the statement on the last day of the month. If it doesn't, work through it entry by entry.
3. Find unmatched entries. Anything on the statement but not in your log (or the other way round) must be explained, every time.
4. Count the cash. Count the drawer or safe and compare it with the cash you should have.
5. Check for duplicates. Double transfers, bills paid twice and entries recorded twice happen more than you'd think. Sort by amount and look for equal amounts on nearby dates.
6. Look for anything unusual. Amounts far above or below normal, entries outside opening hours, or payees you don't recognise.
7. Follow up what's owed. List who still owes the shop, and who the shop still owes.
8. Count stock at month end. This becomes next month's opening stock.
9. Summarise profit and loss. Total income − total expenses, by category, compared with last month.
10. File the paperwork. Put the month's files and receipts in one folder named by year and month.

When the numbers don't match, check in this order

1. Is the difference exactly equal to one entry? Then something was probably missed or entered twice.
2. Is the difference divisible by 9? Then two digits were likely swapped, e.g. 1,250 typed as 1,520 (a difference of 270, which divides by 9).
3. Is the difference double an entry? It may be on the wrong side, such as an expense recorded as income.
4. Check entries that cross months, such as a transfer on the last day that the bank posts the next day.