Monthly Bookkeeping Checklist for Australian Small Businesses

Why monthly bookkeeping matters

Working to a monthly cycle means errors are found while the context is still fresh. You can remember what a payment was for in week three; you generally cannot nine months later.

It also means the numbers you use to make decisions are current. Pricing, hiring and spending decisions made on stale or incomplete accounts are guesses dressed up as analysis.

The compliance benefit is practical rather than dramatic: when activity statements and annual accounts are prepared from records that were already reconciled each month, preparation is quicker and there is far less back-and-forth.

Bank and credit-card reconciliations

Reconciliation is the backbone of the month. It confirms that what your accounting file says happened matches what actually moved through the bank.

Work through every account the business uses, not just the main trading account. Loan accounts, merchant facilities, payment platforms and any second bank account all need the same treatment.

• Import or confirm all transactions for the full month in every bank account
• Match each transaction to an invoice, bill or correctly coded entry
• Reconcile business credit cards and any expense or payment platforms
• Investigate anything sitting in a suspense or holding account rather than leaving it there
• Check that the closing balance in your software agrees with the bank statement

Recording business income

Every sale should be represented once, and only once. Duplicates are common where a point-of-sale system, an online platform and a manual invoice all feed the same file.

Check that customer payments have been allocated against the right invoices rather than left sitting as unallocated credits, and that any deposits or part payments are handled consistently.

• All invoices for the month raised and issued
• Payments allocated to the correct invoice, including part payments
• Point-of-sale, platform or merchant settlements reconciled to sales
• Deposits and customer prepayments treated consistently
• Any income received that is not a normal sale identified and coded correctly

Recording and categorising expenses

Coding is where most reporting distortion starts. A purchase coded to the wrong account will not usually cause an error in the bank balance, but it will quietly misstate your margins and your expense analysis.

Pay particular attention to items that are not straightforward operating expenses: asset purchases, loan repayments that mix principal and interest, owner drawings and private-use portions.

• Supplier bills entered and attached to the transaction
• Expenses coded to the correct account, consistently with prior months
• GST treatment reviewed on each expense rather than assumed
• Asset purchases separated from consumable expenses
• Loan repayments split between principal and interest where applicable
• Private or owner-related transactions identified and treated appropriately

Accounts receivable

Run the aged receivables report every month and actually read it. Debtor balances that drift past terms are the earliest visible warning of a cash flow problem.

Decide, each month, what action attaches to each overdue balance: a reminder, a phone call, a payment arrangement, or a decision to stop supplying.

Accounts payable

Review aged payables so you know what is genuinely owed and when it falls due. Duplicated supplier bills and bills entered but never paid both distort the picture.

Confirm that supplier statements agree with your records, particularly for accounts with frequent small purchases.

Payroll records

Payroll should be reconciled to the accounts rather than assumed correct because the software processed it. Gross wages, PAYG withholding and superannuation in your ledger should agree with what your payroll system reported.

• All pay runs for the month processed and finalised
• Payroll journals posted to the correct accounts
• Wages and PAYG withholding balances in the ledger agree with payroll reports
• New starters, terminations and rate changes reflected correctly
• Leave balances updated for approved leave taken

Superannuation records

Superannuation guarantee obligations are calculated on payroll figures, so an error in payroll becomes an error in super. Check that accrued super in the ledger matches the payroll reports, that fund details for each employee are current, and that amounts already paid have cleared.

Superannuation has its own payment timing rules and eligibility conditions. Confirm your obligations with the ATO or your adviser rather than relying on a general guide.

GST and BAS records

If your business is registered for GST, month-end is when GST coding errors are cheapest to fix. Review transactions where GST treatment is not uniform — insurance, government charges, bank fees, international purchases and wages are common trouble spots.

Keep the supporting documents attached as you go. A correctly coded transaction with no underlying tax invoice is still an incomplete record.

Reviewing outstanding invoices and transactions

Before closing the month, sweep for loose ends: unreconciled items, transactions coded to a holding account, duplicated entries, and invoices raised in error.

Anything you cannot resolve should be listed as an open query rather than coded to something plausible and forgotten.

Reviewing cash flow

With the month reconciled, look at what actually happened to cash: what came in, what went out and what is committed over the coming weeks. Compare that against known upcoming obligations such as wages, superannuation, activity statements and loan repayments.

This is the point where a problem is still a planning question rather than an emergency.

Reviewing financial reports

Once everything reconciles, produce and read the core reports: profit and loss for the month and year to date, balance sheet, aged receivables and aged payables.

Compare against the previous month. Unexpected movements usually mean one of two things — a genuine change in the business, or a coding error. Both are worth knowing about.

Documents and records to retain

Keep the source documents that support the entries: tax invoices, receipts, bank and credit-card statements, payroll reports, loan and finance documents, and any correspondence explaining unusual transactions.

Australian businesses are required to keep business records for a minimum period set by the ATO, and records generally need to be in English and able to explain the transaction. Check the current requirements on the ATO website or with your adviser, as they vary by record type.

End-of-month bookkeeping checklist

1. All bank, credit-card and payment-platform accounts reconciled to statements
2. All sales invoices raised, issued and allocated against payments
3. All supplier bills entered, coded and supported by documentation
4. Expense coding and GST treatment reviewed for the month
5. Payroll processed, journals posted and wages, PAYG and super reconciled
6. Superannuation accruals checked and employee fund details current
7. GST records reviewed if the business is registered for GST
8. Aged receivables reviewed and follow-up actions decided
9. Aged payables reviewed and upcoming payments scheduled
10. Suspense, holding and unreconciled items cleared or logged as queries
11. Source documents attached or filed
12. Profit and loss, balance sheet and aged reports produced and reviewed

When to consider professional bookkeeping support

There is no single threshold, but a few signals recur: the month-end routine keeps slipping, reconciliations are months behind, activity statement preparation regularly turns into a clean-up job, or the person doing the books is the person who should be selling.

Employing staff, adding a second entity or a sharp increase in transaction volume are also common points where an informal approach stops scaling.

Related services

Keep reading

• What Does a Bookkeeper Do for a Small Business?

  A practical look at the bookkeeping function: what gets recorded, what gets reconciled, how payroll and BAS fit in, and where bookkeeping ends and accounting begins.

• BAS Preparation Checklist for Australian Businesses

  A step-by-step process for getting your records BAS-ready: what to reconcile, what to review, and the record-keeping problems that most often hold up preparation.

• What Records Does a Business Need for BAS?

  The documents and records that sit behind an activity statement — sales, purchases, GST information, bank and card statements, payroll records and the supporting paperwork that explains them.