What a Bookkeeper Actually Does for You Each Month

What is a monthly bookkeeping cycle meant to tell you?

It should tell you where the money came from, where it went and what is still unpaid, in numbers you can trust. A monthly bookkeeping cycle has a practical job: turn the sales, purchases, bills and payments from a messy stretch of days into records you can trust. It is not the same as sending somebody a bag of receipts and waiting for a tax return. The IRS describes business books as a summary of transactions supported by invoices, receipts and other documents. That is a useful starting point for a conversation with any bookkeeper.

Before asking someone to take over, decide what you want back. A service owner may need to see which jobs paid, which customers still owe, and whether materials are swallowing the margin. Another owner may care most about recurring bills and cash available for next month. Write those questions down. Then ask how the monthly process will help answer them, rather than judging it by the length of a software feature list.

What happens in a monthly close, step by step?

A close usually runs in the same order every month, and each step feeds the next.

1. Collect. The sales records, bills, and bank and card activity for the period come in.
2. Record. Each transaction is entered and put in a category.
3. Match. Entries are matched to the invoice, receipt or bill that supports them.
4. Reconcile. The books are compared with the bank and card statements.
5. Ask. Anything unclear comes back to you as a question instead of a guess.
6. Report. The month is closed and the reports are prepared.

What kind of bookkeeping system sits behind the close?

Either a single-entry or a double-entry system, and the second is the one that checks itself. Publication 583 describes a single-entry system as one based on the income statement, recording the flow of income and expenses through daily and monthly summaries, and as a practical choice for a small business that is just starting. A double-entry system records every transaction as a debit in one account and a credit in another, so the totals must agree after posting. If they do not, the IRS says, there is an error to find and correct.

If you use a computerized system, the same publication says the machine-sensible records must reconcile with your books and return and provide enough detail to identify the underlying source documents. Ask your bookkeeper which system they use, and how a number in a report traces back to a bill or a deposit when someone questions it.

What records does a bookkeeper need from you each month?

They need the documents behind every sale and every expense, plus access to the accounts. Someone needs to collect the sales records, bills, bank activity and card activity for the period. Missing paperwork matters. A payment in the bank tells you that money moved; it may not tell you which invoice it settled or what a supplier charge bought. Keep the invoice or receipt where it can be matched to the entry. When something is unclear, a good process asks the owner instead of assigning a convenient account name and moving on.

The IRS lists what supports each kind of entry in Publication 583:

• Gross receipts: cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips, and Forms 1099-NEC and 1099-MISC.
• Expenses: canceled checks, cash register tapes, account statements, credit card sales slips, invoices, and petty cash slips for small cash payments.
• Employment taxes: specific records the IRS lists in Publication 15. The IRS says to keep employment tax records for at least four years.

This is also where a simple handoff helps. Agree who sends invoices, where supplier bills live, and how questions about unusual charges come back to you. A shared folder can work; so can a system you already use, provided the records can be found when needed. Avoid a process that depends on somebody remembering what a transaction was three months later. The earlier a confusing item gets explained, the less cleanup the next month needs.

How does reconciliation work, and why do the numbers differ at first?

Reconciliation compares the books with the statement, and the two rarely agree until timing items and missed charges are accounted for. After entries are recorded, a monthly cycle commonly compares the books with the bank and card statements. If an invoice is marked paid but no matching deposit appears, that deserves a question. If a card charge appears twice, so does that.

Publication 583 gives two ordinary reasons a statement balance differs from the books: the statement includes bank charges that were not yet entered in the books, or it leaves out deposits made after the statement date and checks that had not cleared by then. Working through those differences is the job. Reconciliation is a check on the records, not a promise that every business decision was good. Ask which accounts are included and whether unresolved differences are listed for you to answer.

Do not assume that every provider includes every account or every kind of follow-up. A separate payment service, loan account or old bank account might need its own work. When you speak with JE Ledger about business bookkeeping, ask which records and accounts would be in scope for your business. That gets you a clearer answer than a broad promise to "handle the books."

What reports should a monthly close leave you with?

At minimum, an income statement for the month and a balance sheet at month end. The IRS describes an income statement as the income and expenses of the business for a given period, and a balance sheet as the assets, liabilities and equity in the business on a given date. A completed month should give you a consistent picture of income and expenses. Many owners start with a profit and loss report, then look at the balance sheet and what is unpaid. The numbers are easier to compare when categories have the same meaning each month. If materials were filed under one account last month and under a different account this month, a change in the report may be a coding change rather than a change in the work.

Ask when the reports will be ready and who will walk you through an unusual line. A report left in a portal is of limited use if you cannot tell why a cost rose. Bring one specific question: "Why did direct costs jump while sales stayed level?" Then use the underlying bills and job records to answer it. The report points at the issue; the records explain it. JE Ledger also lists accounting services, so ask what report review or follow-up is available rather than assuming a particular package.

What should you agree before the first month starts?

Agree the cutoff date, the accounts to be checked, the records you provide and the reports you expect. Ask how outstanding questions will be tracked and when you need to answer them. If the books are already behind, say so before the work begins. A catch-up job and a steady monthly routine solve different problems, and the handoff should reflect that. Do not let an old backlog hide inside a promise about the next month.

Also clarify what stays with you or another adviser. Bookkeeping records activity; it does not automatically include tax filing, payroll, audit work or every form of business advice. JE Ledger names business bookkeeping, accounting services and financial consultation on its site. Use the contact page to ask exactly what it would propose for your situation. A useful scope is one you can describe in plain language after the call, with no service assumed because it sounded familiar.

Should you keep the books yourself or hand them over?

Keep them yourself while the volume is small and the records stay current; hand them over when the month-end work keeps slipping. Check yourself against this list:

• One account, few transactions and a close done within days of month end make doing it yourself reasonable.
• Month-end work that keeps getting pushed is the signal to hand it over before it turns into catch-up work.
• Business and personal spending in the same account should be separated first. The IRS advises opening a business checking account and using it for business purposes only (Publication 583).
• Cash payments need a receipt in your records. Publication 583 says that when you cannot get one, you should write an adequate explanation in your records at the time of payment, and that checks payable to cash are best avoided.
• If you cannot say what your last three months earned, you need a closed month more than a better spreadsheet.

Once the process is running, take a few minutes each month to look at the reports and the unanswered-items list. If the same kind of question keeps returning, fix the handoff. If a report shows a surprising number, open the records before reacting. The best monthly bookkeeping conversation is a quiet one: the books are current, the exceptions are named, and you can make a decision without starting from a pile of unexplained transactions.