Maintaining accurate and organized accounting records is crucial for the growth of every business. Even then it becomes hard to understand which monthly accounting tasks are worth continuing to keep books in good shape.
In this blog, Finsmart Accounting – one of the best outsourced accounting firms in India – will share 10 accounting and bookkeeping tasks to keep your books in good shape.
Monthly Accounting & Bookkeeping Tasks
1. Audit your inventory data
Inventory is a significant asset for many businesses, particularly those in retail or manufacturing. Proper inventory management involves updating your inventory records to reflect purchases, sales, and adjustments regularly and accurately.
Give some time to order your best-selling products and identify slow-selling items for a price reduction.
2. Review accounts receivable
Maintaining accurate accounts receivable is crucial for maintaining a healthy cash flow. The end of the month is a perfect time to review all your invoices to maintain receivables. It will help you in sending reminders to customers who haven’t paid yet for their purchase.
Late or unpaid invoices can lead to cash flow problems, making it difficult to cover your own expenses and invest in growth.
3. Review accounts payable
As you manage money coming in, you must also keep an eye on the money going out. Keep track of your outstanding bills and ensure they are paid on time. It not only helps to maintain a good relationship with the suppliers but also allows you to take advantage of early payment discounts.
Maintaining accounts payable is crucial as late payments can harm your credit rating and lead to penalties or interest charges.
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4. Financial statements
Generate monthly financial statements, including the income statement (profit and loss statement) and balance sheet. It offers a snapshot of your business’s financial health.
Regularly reviewing your financial statements helps you understand the business’s overall financial performance and make informed decisions.
5. Record sales and revenue
Recording sales and revenue is essential for tracking your business’s income accurately. It involves documenting all sources of income, whether it’s from sales, services rendered, or other revenue streams. Categorize transactions correctly to analyze your revenue sources.
It is also crucial for tax reporting as accurate revenue reporting ensures you pay the correct amount of tax and avoid last-moment surprises.
6. Track budgets and expenses
Every expense related to your business such as rent, supplies, utility, and salaries needs to be recorded properly. That’s because creating a budget is not hard, but sticking to it is something only a few can do.
The best way to keep expenses under budget is by checking it every month and taking action to maintain them.
7. Back up your data
Cloud-based accounting software automatically backs up the data but what if you are not using one of them? In the absence of cloud-based accounting software, it is best to backup financial data on your own every month.
Backing up ensures that your data is safe and you will not lose anything due to technical failure.
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8. Recurring journal entries
Recurring journal entries need to be recorded at regular intervals, including the end of the monthl. It includes depreciation of assets, amortization of loans, and recognition of prepaid expenses. Recording these entries helps in maintaining the accuracy of financial records.
It also aids in the accurate presentation of your financial statements to support better decision-making and tax compliance.
9. Record and issue payroll
Paying employees every month on time is important as they have financial expenses that need to be paid. Accurate payroll ensures that your employees are compensated fairly and your business complies with tax laws and regulations.
Mistakes in payroll can lead to legal and financial repercussions, so precision is essential.
10. Reconcile bank statements
Reconciling bank statements is the foundation of accurate accounting. It involves comparing your statements of business bank accounts with your accounting records. It helps in ensuring that receivables and payables are accurately recorded.
Reconciling helps in identifying bank errors, missed transactions, and accounting mistakes.
Accounting & Bookkeeping Tasks: Wrapup
We hope that these insights helped you learn about the top 10 monthly accounting and bookkeeping tasks for your business. These will help you in ensuring that your financial records are accurate, up-to-date, and compliant with tax regulations.
Got any queries to ask? Send them to firstname.lastname@example.org and have them answered by our accounting experts.
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Shalaka Joshi is the founder of Finsmart Accounting and operates in the capacity of Director. A Chartered Accountant passionate about outsourcing and problem-solving, Shalaka has more than 20 years of experience in the field of accounting, payroll and MIS reports.