A monthly bookkeeping routine for a clearer business picture

1. Give your records one organised home

When business records are spread across messages, email inboxes and paper folders, routine questions become time-consuming. Start with a simple folder structure by year and month. Keep sales invoices, purchase bills, receipts and bank statements together, with filenames that make the date and purpose easy to recognise.

This article offers a practical workflow for small businesses. Adapt the detail to your business, software and reporting needs, and agree the accounting and tax treatment of transactions with your adviser.

• Collect customer invoices and identify those that remain unpaid.
• Save supplier bills and supporting receipts for recorded expenses.
• Download statements for the accounts used by the business.
• Keep a note of cash transactions and owner contributions or withdrawals.

2. Match the records to money movements

Set aside time each month to compare your accounting records with bank statements. Look for transactions that have not been recorded, duplicate entries and payments that do not yet have a supporting document. Keep an open-items list rather than leaving unexplained differences for the year-end review.

Identify transfers between your own accounts so that the same movement is not accidentally counted as income twice. Record personal and business activity distinctly, and ask your accountant how owner payments should be treated in the chosen business structure.

3. Review what customers owe and what you owe

A healthy bank balance does not tell the full story if large supplier payments are approaching. Review unpaid customer invoices, upcoming supplier bills and recurring commitments together. Make follow-up actions specific: who will contact the customer, what information is needed and when the item will be reviewed again.

Use this review to understand cash timing and recurring costs. Where you need formal management reports, agree consistent reporting definitions with your accountant so that month-to-month comparisons remain useful.

4. Close the month and keep the evidence

Finish by documenting unresolved items, keeping a copy of the month's reports and backing up the supporting records. Assign a person to own the routine and set the next review date. A process that is simple enough to repeat is more useful than a complicated system that is rarely maintained.

FBR's income tax record-keeping guidance states that persons with taxable income must retain income tax return records for six years. Confirm any additional retention obligations that apply to your business, and keep relevant evidence available if an issue remains open.

Reference: FBR — Record keeping for Income Tax Return (opens a new tab)