Closing the books every month takes a few hours when it is done regularly and several weeks when it is left to year-end. This is the routine we follow.
Record everything for the month
- All sales invoices entered, with no gaps in the number series
- All purchase and expense bills entered, including those paid in cash
- Salaries, rent and other recurring expenses booked
Reconcile
- Every bank account matched to its statement, with each difference explained
- Cash in hand counted and agreed with the cash book
- Card, UPI and payment gateway settlements matched to sales
- Loan balances and interest agreed with lender statements
Check taxes
- Sales in the books agree with GSTR-1
- Input tax credit in the books agrees with GSTR-2B, with a list of missing invoices
- TDS deducted for the month computed and deposited
- PF, ESI and other payroll dues paid
Review
- Customers overdue for payment listed and followed up
- Supplier balances checked against their statements
- Stock counted or at least spot-checked against records
- Unusual or unexplained entries cleared
Report
Finish with a profit and loss account for the month, a balance sheet, the cash position and the amounts due from customers and to suppliers. Compare them with the previous month and ask about anything that moved more than you expected. That short review is where most problems are caught early.
This guide is general information, not professional advice for your situation. Rules and due dates change; talk to us before acting on it.