Closing the month means checking that everything that happened in your business during the month is recorded correctly in QuickBooks, then locking it in. It is the difference between financial reports you can trust and numbers that are “probably close.”
Use the checklist below at the start of each month for the month that just ended. Print it, or keep this page bookmarked.
- Categorize every bank and credit card transaction
- Reconcile every bank and credit card account
- Clear out Undeposited Funds (Payments to deposit)
- Review accounts receivable
- Review accounts payable
- Empty the “catch-all” accounts
- Record month-end adjusting entries
- Review the Balance Sheet
- Review the Profit and Loss
- Close the books with a closing date
- Save and share your reports
01Categorize every bank and credit card transaction
Open Bank transactions and work through the For review tab until it is empty. Match transactions to existing invoices, bills, and payments wherever QuickBooks suggests a match, and categorize the rest to the correct account.
Create bank rules for transactions that repeat every month (software subscriptions, rent, fuel). It speeds up next month's close.
02Reconcile every bank and credit card account
Open the Reconcile page (search “Reconcile” in QuickBooks), choose the account, and enter the ending balance and date from your statement. Check off each cleared transaction until the difference is $0.00.
Do this for every checking, savings, and credit card account, plus any PayPal, Stripe, or loan accounts you track in QuickBooks.
03Clear out Undeposited Funds (Payments to deposit)
Customer payments you receive sit in Undeposited Funds (called Payments to deposit in newer versions of QuickBooks) until you record the bank deposit. Anything still sitting there at month-end is either a deposit you haven't recorded or a payment that was entered twice.
04Review accounts receivable
Run the A/R Aging Summary report. Follow up on overdue invoices, apply any unapplied customer payments or credits, and void or write off invoices you know will never be paid (talk to your CPA before writing anything off).
05Review accounts payable
Run the A/P Aging Summary report. Confirm every open bill is really still unpaid, look for bills that were paid but never marked as paid (often the cause of duplicate expenses), and enter any vendor bills you received but haven't recorded yet.
06Empty the “catch-all” accounts
Check Uncategorized Income, Uncategorized Expense, Uncategorized Asset, and Ask My Accountant. These should be $0 at month-end. Re-categorize anything sitting in them to the correct account.
07Record month-end adjusting entries
Depending on your business, this can include:
- Splitting loan payments into principal (reduces the loan balance) and interest (an expense)
- Recording depreciation on equipment and vehicles
- Spreading prepaid expenses (like annual insurance) across the months they cover
- Recording accrued expenses you owe but haven't been billed for yet
If you're unsure which adjustments apply to you, ask your CPA or bookkeeper. They usually set these up once and repeat them monthly.
08Review the Balance Sheet
Run a Balance Sheet as of the last day of the month. Watch for red flags: negative bank balances that don't match reality, credit card or loan balances that don't match your statements, or old balances that never seem to change.
09Review the Profit and Loss
Run a Profit and Loss report for the month and compare it with the previous month (use the “compare” option). Investigate anything that looks unusual, such as an expense that doubled, income in the wrong category, or a month with no rent recorded. Most errors stand out here.
10Close the books with a closing date
Once everything is reconciled and reviewed, lock the period so nobody changes it by accident: go to Settings ⚙ → Account and settings → Advanced → Accounting, turn on Close the books, enter the last day of the month as the closing date, and set a password.
11Save and share your reports
Export the month's Profit and Loss and Balance Sheet (PDF or Excel) and keep them in a dated folder. Share them with your business partner, lender, or CPA if they need them. A short note on anything unusual you found makes the numbers easier to understand.
Signs your books need more than a month-end close
- Accounts that haven't been reconciled in months
- Hundreds of transactions waiting in the For review tab
- Bank balances in QuickBooks that don't match your bank
- Large amounts in Uncategorized or Ask My Accountant
If that sounds familiar, a one-time cleanup and catch-up gets everything accurate first, then the monthly close keeps it that way.
Frequently asked questions
How long does a month-end close take in QuickBooks Online?
For a small business whose books are kept up to date during the month, a close usually takes a few hours. It takes longer when transactions have piled up, accounts haven't been reconciled, or there are errors from earlier months to fix first.
When should I close the month?
Close each month once your bank and credit card statements are available, usually within the first one to two weeks of the following month. Closing on a regular schedule keeps small problems from turning into big cleanups.
What if my bank reconciliation doesn't balance?
The most common causes are a missing or duplicate transaction, a transaction recorded with the wrong amount or date, or a previously reconciled transaction that was edited or deleted. Compare your statement to QuickBooks line by line, and check earlier reconciliation reports to see whether the starting balance changed.
Do I need an accountant to close my books?
Not necessarily. A bookkeeper or QuickBooks ProAdvisor can handle the monthly close for you, and your CPA can use the clean, reconciled books at tax time.
Intuit QuickBooks ProAdvisor (Level 1 & 2 Certified) and full-charge bookkeeper with 5+ years of experience helping U.S. small businesses keep accurate, reconciled books. More about Andy →