Ever get to the end of the month and think “hmm I really should have looked at my finances at some point?”. Like sure you generated invoices, you tracked payments coming in and maybe even looked at an expense or two. But what really happened this month in your business financials?

We don’t have to tell you that accurately recording, managing and reviewing your monthly financials is number one when it comes to running a successful business. However sometimes it can get so overwhelming it’s a little tricky to know where to start. This month get started with our Monthly Financial Checklist if nothing else you will definitely get that sense of relief that comes from knowing you did something great for your business today!

1.Book & Categorize Transactions

Let’s start with the basics! It is important to categorize your transactions so you can start to review them. This is easily done by connecting your accounting software to your banking records. Alternatively utilize a spreadsheeting system like excel to sort through your transactions.

Most transactions will fall under an expense, revenue or owners’ equity account.

2. Bank Reconciliation

A bank reconciliation involves match the balance in your accounting system to the balance in your bank and credit card accounts. This process helps to ensure the accuracy of your accounting records by identifying errors or missing transactions.

We make decisions based on what is in our accounting systems it is therefore incredibly important to ensure their accuracy.

3. Account for Tax Liability

“I love tax season?” said no one ever! Well actually you could be on your way to mildly enjoying paying your yearly taxes if you make a few small changes!

Review your revenue takings for the month and calculate your monthly tax obligation. There are two approaches to managing this obligation!

  1. Transfer your monthly tax obligation to a separate bank account, at year end you will likely have more in your tax account then you owe! Withdraw the excess as a nice yearly bonus! #shoppingspree
  2. Create a liability account in your accounting system to account for the upcoming tax obligation. Review this monthly to ensure it is higher than your expected tax obligation.

4. Review Actuals vs Budget

Generate a profit and loss report in your accounting system for review of monthly expenses and revenue.  Explain any variances between budget and actual spend and prepare a revised forecast for the next few months.

5. Review Cash Forecast

Review current cash balance along with future cash sources & cash obligations. Identify time of uncertainty to negative cash balances and create a cash flow plan to manage.

 That’s it! You are done! You can thank us later for the mass amounts of relief you are most likely feeling! Remember this isn’t an exhaustive list, and or course really depends on the type of business you are in and your goals.

Did you get stuck after step 2? No problems! Reach out to Clear Margin Consulting for assistance with all things Business Financials!

Clear Margin Consulting is a Financial & Strategy Consulting Firm based in Vancouver, Canada. We help small business owners to better manage their financials so that they can make better informed decisions and grow their business.

For more information and to receive a Free Budget Template sign up to our blog or contact us for a complimentary strategy session!