Most tasks can be completed at month end for small businesses. If your business’ bank statement is 10 pages long, meaning you have many transactions of income,expenses, or transfers, then you may need to do these daily tasks weekly or sometimes daily.
Most companies use software like QuickBooks to track journals. Again it should depend on your business size, or expendable funds at hand. Enter bank statement entries into the journal, this reallocates the item to the proper accounts. You may not need to physically enter the amount from your bank statement if your using invoicing or if your bank is connected to QB electronically.
- Enter business transactions into the general ledger to create a permanent financial history of your business.
- Invoice your customers.
- Make cash deposits.
- Run Daily Cash Flow.
- Back up data.
End of month
- Reconcile the bank statement to ensure every transaction is accounted for and it allocated to the proper account.
- Financial Statements: Once the reconciliation is complete then you can print the Profit and loss statement, the balance sheet, and the statement of cash flows.
- Review: this helps ensure that there are no data entry errors and also aids in business planning for the future.
Income Tax Effect
If you’re a sole proprietor (SCH C) or independent contractor (SCH C) or the sole member of an S Corp (1120S) you will use the Profit and Loss Statement to list your income and expenses on one of those forms. That will give you your taxable income and/or self-employment tax.