A month-end checklist is the “safety net” that catches errors before they become permanent records. This ensures that the connection between the P&L and the Balance Sheet stays accurate.

The “Clean Books” Month-End Checklist

1. The Reconciliation Rule

• [ ] Match the Bank: Ensure every transaction in your accounting software matches your actual bank and credit card statements. If the balances don’t match, your categorization doesn’t matter because the data is incomplete.
• [ ] The “Uncategorized” Sweep: Search for any transactions labeled “Uncategorized,” “Ask My Accountant,” or “Misc.” Force these into one of the “Big Five” categories.

2. The P&L “Sanity Check”

• [ ] Review Negative Expenses: Unless you received a massive refund, expenses should be positive numbers. A negative expense usually means a deposit was categorized incorrectly.
• [ ] Compare to Last Month: Look at your P&L side-by-side with the previous month. If “Utilities” was $200 last month and $0 this month, you likely missed a bill or categorized it somewhere else.

3. The Balance Sheet “Audit”

• [ ] Check Large Purchases: Look for any single transaction over a certain threshold (e.g., $2,500). Ensure these are sitting in Assets, not Expenses.
• [ ] Loan Balance Verification: Compare your loan statement balance to the Liability balance on your Balance Sheet. If the Balance Sheet shows a higher amount, you haven’t properly separated the principal from the interest.

4. The “Personal” Filter

• [ ] Owner’s Draw Review: Ensure any money you took out for personal use is sitting in Equity (Owner’s Draw). It should never be listed as a “Salary Expense” unless you are on formal payroll (W-2).

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