How To Do Bookkeeping Month-End Close (Step-by-Step)

What does a bookkeeper actually do every month?

In this video, I'll walk you through my complete monthly bookkeeping workflow and show you exactly how I manage my bookkeeping clients from start to finish. You'll see how I stay organized, communicate with clients, reconcile bank accounts, review financial reports, and keep dozens of clients on schedule using a repeatable system.

Whether you're just starting a bookkeeping business or looking to improve your bookkeeping process, this video will give you a practical framework you can implement immediately.

In this video you'll learn:

• My complete monthly bookkeeping workflow
• How I stay organized with multiple bookkeeping clients
• How I use QuickBooks Online to manage monthly bookkeeping
• How I collect information from clients each month
• How I reconcile bank and credit card accounts
• How I communicate with bookkeeping clients
• How I organize client files and recurring tasks
• Why consistency and systems are the key to scaling a bookkeeping business

This is Week 8 of my 10-part series on how to start and grow a bookkeeping business. If you're serious about becoming a What is a month-end close, and why is it so important?

In this video, I'll walk you through my complete month-end close process and show you exactly how I close the books for my bookkeeping clients each month. You'll learn how to reconcile accounts, review transactions, analyze financial statements, communicate with clients, and create a repeatable system that keeps your bookkeeping accurate and organized.

Whether you're starting a bookkeeping business or looking to improve your bookkeeping skills, mastering the month-end close is one of the most valuable services you can provide to your clients.

In this video you'll learn:

• How to perform a month-end close step by step
• How to reconcile bank and credit card accounts
• How to review and categorize transactions
• How to identify bookkeeping mistakes before closing the month
• How to review a Profit & Loss Statement and Balance Sheet
• How to communicate with bookkeeping clients after the books are complete
• How to build a repeatable month-end bookkeeping process
• How to improve accuracy and efficiency with every monthly close

This is Week 9 of my 10-part series on how to start and grow a bookkeeping business. If you're serious about becoming a professional bookkeeper, I recommend watching the entire series from the beginning.

Previous videos include:
• How to Start a Bookkeeping Business
• Can You Start a Bookkeeping Business With No Experience?
• How to Get Your First Bookkeeping Client
• How to Set Up a Bookkeeping Business
• How Much Should You Charge for Bookkeeping?
• How to Sell Bookkeeping Services
• How to Onboard a Bookkeeping Client
• My Monthly Bookkeeping Workflow (Step-by-Step)

Next week's video:
How To Scale A Bookkeeping Business

Subscribe for weekly videos on bookkeeping, QuickBooks Online, bookkeeping workflows, bookkeeping businesses, pricing, marketing, client management, financial statements, and growing a successful bookkeeping business.

#Bookkeeping #MonthEndClose #QuickBooksOnline




Learn more about my investment fund targeting 8% to 12% fixed returns
https://www.zipcapitalfund.com/

Transcript

SPEAKER_00 0:00

How to perform month and close step by step. Today is week nine in our 10-week series where I break down everything you need to know how to start your own bookkeeping business. My name is Zach Pascarello. I started my own bookkeeping business six years ago, grew to 80 monthly clients, $40,000 monthly recurring revenue. And now just simply I'm teaching you everything that I learned from the past six years so that you can avoid the mistakes that I made and hopefully fast track to success. Let's jump right into it. Topic number one reconcile every account. Month and close starts with reconciliation. What is reconciliation? That's a great question. I'm happy you asked. Basically, we are just taking our accounts in QuickBooks, whatever bookkeeping software, take your accounts and make sure they are accurate. And we do that by checking the beginning balance and the ending balance in the accounts in QuickBooks and compare that to the bank statement, credit card statement, monthly loan statement. Basically, the accounts, think about it like this the accounts in QuickBooks is the test, and the bank statements are the answer key. So in order to grade the test, we have to go line by line. Think about it like a hundred question multiple choice question, a hundred question test. And it's either A, B, C, or D. And so you've got the hundred questions with the little bubbles. Remember high school? The little bubbles A, B, C, D filled in. You've got the answer key. And so now we're literally just going question number one, A, question number one, A, question number two, B, question number two, B. And you're just gonna go down the line. And it's the exact same concept with a bank statement and QuickBooks, our chart of accounts, we have transactions. So we just need to check every transaction. July 31st, Home Depot, $100, July 31st, Home Depot, $100. Looks good. Now, QuickBooks, you can make the process a little bit faster instead of actually checking every single transaction. Here's how bookkeepers practically reconcile accounts. Instead of actually going line by line, instead, what we can assume, if we have the beginning balance and then all of the transactions and then the ending balance, if those two numbers match, beginning balance, ending balance in QuickBooks, if those two numbers match what we have on the bank statement, then we can generally assume not a hundred percent accurate, but we can generally assume that all of the transactions that make up that beginning balance and ending balance, all of those transactions are accurate. We can assume that because the ending balance matches, the beginning balance matches, and so everything in between should match. Now, does it always match? No, it's not always perfect, but it's generally an assumption we can make whenever you reconcile an account. If the ending balance and beginning balance in QuickBooks match what you have on the bank statement and the credit card statement, you can generally assume, probably 97% accuracy, that all of your transactions are correct. So every time you reconcile, you want to hit almost all of the balance sheet accounts if you can. If you have a statement for it, or if you have supporting documentation for a balance sheet account, you should reconcile it. Bank account, 100% absolutely yes. Credit card, for sure, every month, yes. Loans, some people reconcile loans annually, other people reconcile loans monthly. The benefit to reconciling loans monthly is that you understand your profitability, your true profitability on a monthly basis because of interest expense. When we reconcile a loan, we are typically splitting the payment into principal and interest. If you don't reconcile the account, you might not be capturing interest expense on a monthly basis. Instead, some people just wait until the end of the year, which is fine for taxes, but it's not great for monthly reporting, for true monthly profitability. And then there are other balance sheet accounts that I think should be reconciled: prepaid expenses, unearned revenue. Absolutely. I think you should have an Excel spreadsheet or some other supporting documentation that acts like a bank statement. You might not have a formal statement, but you can absolutely create one. You can't create a formal statement, but you can create supporting documentation that you can use to check what you have in QuickBooks. As an example, with Zip Capital, I have loans receivable and I have investor funds raised. You bet you better believe I am reconciling at least monthly my loans receivable and my investor funds raised. So in my investor software, I know how much money I've raised because I track it in my investor portal. And so I use that as the supporting documentation. So I check that and I reconcile. I literally reconcile this liability account in my zip capital QuickBooks and I check investor funds raised. And I will literally reconcile it at the end of the month to make sure that it matches. Same thing with loans receivable. I don't have software to track my loans receivable, so I have an Excel spreadsheet. Every time I fund a new real estate loan, I add it to my tracker. Every time I get paid off, I add it to my tracker. So I know exactly how many outstanding loans that I have on my spreadsheet. And then I also track it in QuickBooks, of course, because to fund a loan, you gotta wire money. And to when you get paid off from a loan, you receive a wire. So the the actual bank transactions are impacting the loans receivable in QuickBooks. And so I can track that, I can reconcile that by utilizing my spreadsheet and reconciling QuickBooks loans receivable. So the reason I wanted to explain that, just because you don't have a formal bank statement, credit card statement, or loan statement, just because you don't have that doesn't necessarily mean you can't reconcile that account. You just have to create supporting documentation that you can use to check and verify that the accounts are reconciled. And also, this is kind of interesting. Whenever you're doing this manual reconciliation of miscellaneous accounts, it's not always QuickBooks that's wrong. Sometimes QuickBooks is actually right. My spreadsheet might be wrong. So it's really good to have checks and balances whenever you're dealing with prepaid expenses, undeposited funds, unearned revenue, accounts receivable, and other miscellaneous balance sheet accounts. Anytime there's an unreconciled difference, you have to investigate it. Don't push it off, don't ignore it because it's never going to go away. If you have an unreconciled difference, you have to figure out what's going on. Oftentimes, it's like finding a needle in a haystack, but that is our specialty. We are detail-oriented, we're good at looking at spreadsheets and bank statements and credit card statements. That's that's quite literally why people hire us. To do the actual bookkeeping, you could you could train, you could train any old AI agent to actually record the transactions. But when it comes to problem solving, this is where people don't people underappreciate the value of a bookkeeper when it comes to problem solving. When when things are good, it's great. No problem. I can do this on my own. I don't need to hire a bookkeeper. As soon as there's an issue, there's a reconciliation issue, there's a missing transaction, there's a duplicate transaction, I can't figure it out. I've spent 10 hours trying to solve it. I need a bookkeeper. This is where we can really prove our value, problem solving. And it comes down to finding these unreconciled differences. Never move on until every account is reconciled, of course. Because if it's not reconciled, you don't know if it's 100% accurate, right? So I would not want to send financial reports to anybody unless I knew that it was accurate. Okay, let me talk real quick about Zip Capital. So I mentioned it a little bit ago. Zip Capital is my investment fund, and this video is sponsored by Zip Capital, my investment fund. Here's what I do really simply, I lend money to Pennsylvania real estate investors. Started in 2023 with my own money, quickly scaled up, started raising capital from other people. So now I've got about $1.5 million of my own cash lent out, and I also have six and a half million dollars of other people's money lent out right now. So I've got more than eight million dollars lent out in Pennsylvania, and I'm trying to raise more capital because I have a lot more real estate borrowers, real estate investors who need loans. So if you're interested in joining Zip Capital, I do have a link down below in the description of this video, zipcapitalfund.com. Go ahead, check it out. Check out my website, let me know if you're interested. I would love to chat. The minimum to invest is $25,000 and you must be an accredited investor. So look into it if you qualify. Let me know. I would love to chat. Okay, topic two review every transaction. Reconciling isn't enough. You still need to review the books. Now, are you going to review every single transaction every time? No, probably not. But uncategorized transactions, absolutely. Ask my accountant, uncategorized transactions, general transactions. If it doesn't look right, look into it. Uncleared transactions, absolutely, every time. All of your uncleared transactions. This typically happens whenever you manually create a transaction in QuickBooks. So for example, let's say I cut a check. And so I will go into QuickBooks and I will enter the check July 30th, Mark Cuban, $1,000, independent contractor, and check number 1, 2, 3. So July 30, and then I put it in the mail. So July 30th, I have this check and I put it in the mail, and it's going to Mark Cuban for $1,000. Now, when I when I go to reconcile my accounts as of July 31st, chances are that check probably has not arrived yet. So that's going to be an uncleared transaction in my books. I manually created the check and I'm waiting for it to clear my bank account. I'm waiting for Mark to receive the check and deposit into his bank account. So that is an uncleared transaction. So you always want to look into every uncleared transaction. Now, let's say October rolls around and that check is still uncleared. That's a problem. July 31st, not a problem. 24 hours, perfectly normal. October, three months later, that's a problem. If you've got an uncleared transaction for multiple months in a row, look into it. See if the check got lost in the mail, see if it was a duplicate transaction, see if it was a mistake or it was a voided transaction. Always look at every uncleared transaction because uncleared transactions, this is important. Uncleared transactions still affect your profit and loss. So that check that I cut, independent contractor, $1,000 July 30th, that's still going to show up on my profit and loss in July as $1,000. So uncleared transactions still affect your profit and loss. They are just uncleared. So they might not clear through the July reconciliation. Very important, very important. Uncleared transactions still affect profit and loss financial reports. Then we have large or unusual transactions. If there was a $50,000 bank deposit, you might not just want to record that as income without asking any questions. If there was a large $5,000 ACH transfer and that's unusual for your client, you might want to look into it. And large or unusual transactions are going to look different for everybody. I might not be able to say anything anything above $10,000 is unusual. That might be the case for this client, but maybe that client very frequently has large transactions. So large or unusual is all relative to your client. If you've got a very small client, solo entrepreneur, owner operator, $100,000 of revenue, $2,000 or $3,000 might be a really big deal. If you've got a large client with $5 million of annual revenue and 30 employees, maybe $2,000 or $3,000 isn't as big of a deal. Still a big deal, but not but relatively not as big of a deal as it might be for that solo entrepreneur making $100,000. So uncleared transactions, large and unusual transactions. And then confirm everything is categorized correctly. You can literally check every transaction if you want. Sometimes it's helpful to review the general ledger. You can pull up the general ledger and you can quickly scan or you can spot check. Maybe you don't check every transaction, but maybe you do just check the 10 largest transactions. Or maybe you go through every chart of account and maybe you check three or four transactions in every expense category just to make sure everything is categorized correctly. So you don't have to check every transaction, but definitely the large or unusual transactions and maybe spot check every month just to make sure that things are being categorized correctly. Topic number three. So once we have transactions reviewed, accounts reconciled, now review the financial statements. This is where bookkeeping becomes really valuable. This is where you can go above and beyond just traditional bookkeeping, just basic bookkeeping. We've got the profit and loss. Maybe you review the profit and loss, especially before you send it to your client. That way you can find mistakes or you can find unusual expense categories. I think it's really beneficial to run the profit and loss by month. This is by far my favorite financial report in QuickBooks. Profit and loss by month. And I always do it from the start of the year until the current year. So if I'm closing out July 2026, I will look at January through July 31st and I will look at it month by month. So I'll have the I'll literally have a large landscape PDF January, February, March, April, May, June, July, each month separated so that you can identify trends and so that you can identify unusual drops or unusual increases. Maybe payroll is usually $20,000 a month, but this month it was $28,000. That's weird. Let me look into it. Oh, that makes sense. There were three pay cycles last month instead of only two pay cycles. That type of that type of analysis, that type of investigating is going to make you look like an incredible bookkeeper. Because if you send that PL or if you have your meeting with your client and they ask you that question, like, hey Zach, why why is payroll 50% more this month than it was last month? If you know immediately, oh, there were three pay cycles last month. That's why. That's going to make you look so put together, so smart, so savvy. Do some research, review the PL before you send it to your client. Look at the PL by month. It's a very easy way to identify, huh? That's interesting. Job supplies is usually $30,000, but this month it was only $15,000. That's weird. I wonder why. PL by month, look at every account, look at large differences. And if there's a large difference, look into it. Look at the general ledger, review the transactions, try to figure out what's going on. Look for anything that doesn't make sense. Once you do the bookkeeping, yes, you're not the business owner. You might not be the operations manager, but once you get a feel for the bookkeeping in the business, you generally know what makes sense and what doesn't make sense. And then before you finalize the books, don't be afraid to ask questions. With that being said, every client is different. Some clients, attention to detail, very, very much involved, great at organization, great at communication. Those type of clients probably want you to ask more questions. Then we all have the other type of clients who never respond to emails, not great at communication, very unorganized, have no idea what's going on. They would probably rather you not ask too many questions. So you got to treat your clients differently. Figure out which clients want that extra attention to detail and which clients don't really care, or actually probably get overwhelmed by that extra attention to detail and ask questions. If something genuinely doesn't make sense, or if something genuinely looks off to you, don't be afraid to ask questions before you send the final profit and loss to the client. But once all that's done, once you've reviewed it, oh, I forgot to say the balance sheet. Absolutely. So many people forget to look at the balance sheet. In my opinion, balance sheet more important than the profit and loss. Now, with that being said, if you've got a basic business with one bank account, one credit card, and that's it, then of course, yes, balance sheet doesn't matter. But once you start dealing with assets and liabilities, especially for trucking companies and real estate investors and investment fund managers and private money lenders like me, like once you start dealing with asset and liability heavy companies, the balance sheet actually becomes incredibly important. So absolutely review the balance sheet. Every here's a good test. Every line item on the balance sheet should make sense. Like, seriously, like you should see that line item like, yep, I know exactly what that is. Yep, that that liability right there, tracking that, know exactly what that is. There's $30,000 in that line item, in that liability. I know exactly where that's coming from and where that's going. Seriously, whenever you look at the balance sheet for your own company and for your clients' companies, every line item on that balance sheet should make sense and you should know what it is. If you see something that looks wrong or that you've got no idea what it is, you should look into it and you should start asking questions. The balance sheet is incredibly important, especially accounts receivable, undeposited funds. This is probably where I see the balance sheet get messed up the most. Look into undeposited funds on the balance sheet if your client is using accounts is using QuickBooks to track and manage accounts receivable. Now, once all that's done, it's time to communicate with the client. Don't just finish the bookkeeping. You got to close the communication loop. So send any final remaining questions. That should all be done. And then deliver the monthly financial reports. I usually do it in an email. If you want, you can actually send directly from QuickBooks, or you can use some type of CRM customer management software, keeper, and various other types where maybe you upload the profit and loss to a certain portal or a drive or a Dropbox or something like that. However, you do it, deliver the monthly financial reports. I keep it simple. I just email the monthly profit and loss every month to the client. If you want, you can include an explanation of any unusual items, but hopefully all of that gets hashed out before you send the final profit and loss. Keep communication simple. Keep it super simple. Don't overcomplicate things. If they really want to talk about something or if they have questions, that's when you want to schedule a meeting. 10-15 minutes. Here's my calendar link. If you have questions, if you want to review it, let's hop on a call and let's talk through it. That'll be so much easier and faster than trying to go back and forth through email if they have questions. And then tell the client month is complete. Hey, every time I send you your PL, that means I'm done for the month. That means your transactions are categorized, your accounts are reconciled. When I send you that final PL, unless you have any questions, I'm done for the month. So communicate that to the client. That is your checklist. You got to build a repeatable system. The goal is not just to close one month, it's to close every month efficiently. That's very important. As you grow, as you scale, when you get your first client. You might just think, gosh, I gotta get through this first month and close. But guess what? It never stops. It never stops. For the rest of your life as a bookkeeper, you are going to be closing month end close for the rest of your life, for the rest of your client's life. Every single month, it never stops. So you want to develop an efficient system. Follow the same checklist every month. Did you record the transactions? Yes or no? No. Do you have questions? Yes or no? Did you reconcile the accounts? Yes or no? Yes? Great. No. Are you waiting on bank statements? Specifically, which statements are you waiting for? And then did you send the profit and loss? Those three questions should be on your checklist every month. I have all of my clients. I've got a checklist in Excel spreadsheet with those three questions. Every month end close, I answer all three questions. Create a standard workflow for every client. Every client looks different. Some clients might want statement of cash flows. Some clients might want their PL, cash basis, and accrual basis. Some clients might have prepaid expenses. Others might have unearned revenue. Some clients might put their bank statements in a Dropbox. Other clients might email you their bank statements. Other clients, you might have view-only access to their bank accounts and you can pull the statements yourself. Every client is different. Create and document a standard workflow for every client. Write down your SOP, your standard operating procedures so that this is huge, you can hire people to do the work. If you have documented processes, if you have an SOP for every client, it's so easy to hire somebody to start doing the work. If it's all in your head, it's going to be really hard for you to hire somebody. Write it down early. Start today. As soon as you get your first client, start documenting processes and SOPs in the beginning, right away. If you try to do it in the end, overwhelming, you're not going to do it. If you do it early in the beginning, it'll be easy to keep doing it. Don't reinvent your processes. Just stick to the same way you've been doing things. With that being said, of course, improve your processes, but you don't have to constantly change them just to try something new. If something's working, keep doing it. If it's not working, try to make it better. You don't need to reinvent your process every week. Systems reduce mistakes. Plain and simple. If you have a system, if you have a checklist, if you have a process and a procedure, you're much less likely to forget things and you're much less likely to make mistakes. Bookkeeping is repetitive, it's redundant. We do the same thing every day, every week, every month, every quarter, every year. It's the same process, year after year. If you have a system, if you keep it simple, if you keep it the same, then you're going to avoid mistakes. And just as importantly, you're going to save time. If you follow the same checklist and the same procedure every time, you're going to get much faster and more efficient, which is going to save you time. That is exactly how I was able to scale to 80 bookkeeping clients because I kept the same process. I kept the same system. So I reduced mistakes and I saved time. I became more efficient and I was able to grow from 10 to 20 to 40 to 80 bookkeeping clients in four years, making $40,000 a month, monthly recurring revenue by having the same system. It's all about consistency. Consistency in marketing, in sales, in creating social media marketing content, and also consistency in delivering high-quality customer service. That is what allows you to scale your bookkeeping business. That's it, everybody, for the video. Week nine in our 10-week series. Stay tuned next week for the last video in this 10-week series. If you're interested, possibly investing in Zip Capital, check out the link down below. You gotta have $25,000 is the minimum. And to be an accredited investor, that means you have $200,000 of annual income or $1 million net worth. So if that sounds like you, if you're interested, you want to learn more, zipcapitalfund.com, check out the link in the description down below. I would love to chat. Thank you so much for watching. I'll see you all next week.