Running a small business or startup often means wearing many hats, and accounting can feel like one of the most overwhelming tasks. Whether it's keeping track of receipts or preparing documents for your CPA, falling behind on your bookkeeping can quickly become a headache. But with the right process in place, managing your finances can be a breeze.
Below, we break down the key steps in creating an efficient monthly accounting process, and we've even included a few free resources to help get you started.
The monthly accounting process—or monthly accounting cycle—is a systematic approach to managing your financial records. It's designed to ensure your financial data is accurate, up-to-date, and complete. Your monthly accounting process includes categorizing transactions, reconciling bank accounts and credit cards, making journal entries, and producing your monthly financial statements.
By staying on top of your books monthly, you’ll reduce errors, mitigate fraud risks, and avoid scrambling at year-end.
Key components include:
To help streamline this, we’ve created a monthly accounting checklist you can download below. Setting a schedule, such as the first week of each month, helps ensure consistency.
Automation and the right tools can make all the difference in how smoothly your accounting process runs. Here are some tools to consider:
Integrating your accounting software with other systems, such as a CRM or ERP, reduces manual data entry and ensures accuracy. We’ve included a bookkeeping tracking template in the file below that you can download and use for your business. It’ll even create a profit and loss statement for you.
Establishing strong internal controls is essential for preventing fraud and minimizing errors. This involves:
We’ve created a segregation of duties and audit template to help get you started with setting up internal controls.
For your business to grow, you need to transition from handling every task yourself to delegating. Proper documentation of your accounting process ensures consistency and scalability, allowing you to bring others on board more easily.
With clear documentation and delegation, you'll be able to focus more on strategic growth rather than day-to-day accounting. We’ve created a delegating accounting procedures template below to help get you started with setting up internal controls.
Regularly reviewing your financial statements and key performance indicators (KPIs) is essential for monitoring the health of your business. Key statements include:
KPIs like revenue growth, profit margins, and liquidity ratios help assess your business performance. Compare these metrics to industry benchmarks to identify areas for improvement.
As your business grows, so should your accounting process. Regular reviews and incremental updates help maintain efficiency and accuracy without overhauling your entire system at once. Startup bookkeeping is different from small business bookkeeping is different from mid-sized business bookkeeping. Same thing goes for small business accounting, payroll, and tax strategy.
It’s important to review your processes at least annually to make sure you’re scaling your business processes as much as your scaling your business.
Implementing an efficient monthly accounting process is critical for maintaining financial health and avoiding last-minute stress. With these steps in place, you’ll have a solid foundation to grow your business while ensuring your financial records are accurate, complete, and ready whenever you need them.
Plus, don’t forget to download our free templates and checklists to make your monthly accounting process smoother!
Stay on top of your business’s financial health—because it’s not just about taxes, it’s about strategy.
About The Author
Igor Tutelman, CPA is the Managing Partner of Iota Finance and the writer behind Not Your Father’s Accountant™. Igor started his career working for large corporations in tax and corporate finance roles before leaving for the world of tech startups. After a successful exit, he took some time off and returned to the accounting industry to build the firm he wished he had as an entrepreneur - Iota Finance. Iota Finance is a remote accounting firm that focuses on helping startups and small businesses with taxes, accounting, bookkeeping, payroll, and fractional CFO services.
Have questions or need more detailed guidance? Contact us at Hello@Iota-Finance.com or Schedule a Free Consultation, and we’ll help you get started.