What You Need To Know About Closing Your Books

Whether you're a small business or publicly traded company, having a month-end close process is crucial to your success. Many young business owners start their entrepreneurial careers wearing many hats, which can be overwhelming to say the least. Here are a few things you need to know about closing your books.

What it means to "close your books"

Closing your books is a monthly and year-end activity where businesses finalize and report all financial documentation. The term “Books” refers to your company's transactions, which are then used to generate financial statements like profit and loss reports. These transactions inform you about the money flowing in and out of your business.

Closing your books indicates that your finances are up-to-date for that time period. Proper bookkeeping prevents inconsistencies in your data each month of every year. Closing out your transactions also allows you to generate financial reports, which inform you about your company's performance. This can be done through software, such as QuickBooks, which Douglas Business Solutions is a proud Certified ProAdvisor of.

Closing your books on time is crucial for the overall financial health of your business and it also helps you file your tax returns on time.

A few tips to close your books

1. Review accounts receivable

Verify that all customers receiving goods and services in the month have been invoiced.

2. Review accounts payable

Verify that you have received and posted vendor bills for all goods and services in the month you have been invoiced.

3. Reconcile bank and credit card accounts

Compare the balance on your bank and credit card statements to the balance in your accounting software system.

4. Review financial statements

Compare your financial results to your budget. If their are discrepancies, analyze your transactions and correct any mistakes.

Takeaways about closing your books

Depending on your business strategy, closing your books can be done at either month-end or year-end. We advise you to reconcile your accounts on a monthly basis. Generating reports every month can help you track your business performance efficiently while keeping your finances updated.

For any questions you may have, we encourage you to Contact Us!