Updated August 2025
Closing your books each month is one of the most important steps you can take to keep your financial information accurate and useful. A monthly close means reviewing your financial records, confirming that everything is complete and correct, and locking the period so it can’t be changed without oversight.
Done consistently, it helps you see the true financial health of your business, spot issues early, get timely numbers you can act on, and make tax season far less stressful. Think of it as running a financial health check every 30 days. The sooner you have reliable numbers, the more valuable they are for planning, and forecasting.
Why timeliness matters
Questions about transactions are easiest to answer when they’re fresh in your mind. Waiting several weeks or months makes it harder to remember details and takes more time to track down missing information. Resolving issues promptly keeps your records clean and avoids last-minute scrambles later in the year.
Your monthly close checklist
Whether you are the lone accountant or part of a larger department, it’s your primary responsibility as the keeper of the books to ensure accuracy so others using data have good numbers to work with. The faster they have those numbers, the more beneficial they will be to the organization.
To close out your books each month, follow these steps:
1️⃣: Post all transactions. Enter every transaction from bank and credit card accounts, loans, and payment platforms like PayPal or Stripe. Attach receipts to each entry, whether in your accounting software or in a secure cloud folder. Many platforms now allow you to email receipts directly into your accounting system to cut down on paper files.
2️⃣: Review account coding. Run a General Ledger report and scan for misclassified transactions. If you use QuickBooks Online Accountant, the “Reclassify Transactions” tool can make this faster. Other software like Xero or Sage has similar bulk edit options. Accurate classifications keep reports reliable and make comparisons more meaningful.
3️⃣: Reconcile all accounts. Compare every bank, credit card, loan, and line of credit account to third-party statements. This includes payment services such as PayPal or Venmo. Pro tip: Automating bank feeds can help, but always confirm balances against official statements.
4️⃣: Analyze variances. Perform a high-level “flux” analysis on your profit and loss statement. Compare the current month to prior months and review any unusual changes in revenue or expenses. For example, if travel expenses are significantly higher than usual, confirm whether that was planned or an error.
5️⃣: Lock the period. Once everything checks out, close the prior month in your accounting software. This prevents accidental changes and provides a clear record of final numbers. Some systems require a password or administrator approval to reopen the books—these settings offer extra control.
What happens without a monthly close
If the numbers tell the story of a business (and they do!) and your numbers aren’t accurate, the story of your business won’t be true. A solid set of books is Step 1 for a successful accounting department. If the books aren’t right, the work of everyone else using those numbers isn’t right. Inconsistent closing can lead to decisions made with outdated or incomplete numbers, missed opportunities to catch errors or fraud, more work during tax season, and reduced confidence in your financial reports from lenders or investors.
Best practices for a smooth close
Create a close calendar so the same steps are followed each month. Delegate routine tasks where possible to free up time for analysis. Use accounting automation to reduce manual entry and speed up reconciliations. Keep communication open with anyone who has spending authority to quickly address questions.
A monthly close lays the groundwork for every other financial process. Accurate books give you a dependable starting point for forecasts, budgets, and tax returns.
Some businesses prefer to work on this on their own. If you’re ready to outsource the monthly close, along with all your other accounting needs, fill out our Get Started form.
