What Your Bookkeeper Should Do Every Month: A Simple Checklist
Core Monthly Tasks: The Non‑Negotiables
Think of this section as your baseline monthly routine. If nothing else gets done, these should.
1. Bank and Credit Card Reconciliations
Match every transaction in your bank and credit card statements to your bookkeeping software (e.g., QuickBooks, Xero).
Confirm that statement balances match the balances in your books at month‑end.
Investigate and clear up:
Duplicate entries
Missing transactions
Unexplained differences
Why it matters: Reconciliations are the foundation. If your bank doesn’t match your books, every report you look at is suspect.
2. Recording and Categorizing Income
Enter all customer payments received during the month:
E‑transfers
Credit card payments
Cheques
Cash
Ensure each payment is applied to the correct invoice, so your accounts receivable report is accurate.
Categorize revenue properly by product or service line when possible (e.g., “Consulting,” “Product Sales,” “Maintenance Plans”).
Why it matters: Clean income records show you which services or products actually make money—something your earlier posts already highlight as crucial for good decisions.
3. Recording and Categorizing Expenses
Enter all business expenses:
Supplier invoices
Software subscriptions
Rent, utilities, insurance
Mileage or travel costs
Assign each expense to the right category:
Cost of Goods Sold (COGS)
Operating expenses (rent, utilities, advertising, etc.)
Attach or store receipts (digital or paper) in an organized way for CRA support:
Use your bookkeeping software’s attachment feature, a receipt app, or a simple folder system.
Why it matters: Proper expense categorization affects your profit, taxes, and ability to spot cost creep.
4. Accounts Receivable Review (Who Owes You)
Run your A/R aging report (list of unpaid invoices).
Flag:
Invoices that are past due
Clients who regularly pay late
Take action:
Send reminder emails or statements
Make quick phone calls on larger overdue amounts
Decide when to pause services for chronic non‑payers
Why it matters: Slow‑paying customers are one of the biggest causes of cash flow stress. Reviewing this monthly keeps issues from piling up.
5. Accounts Payable Review (Who You Owe)
Run your A/P aging report (list of unpaid bills).
Confirm:
Which bills are due next month
Any invoices you’ve received but not entered yet
Plan payments:
Schedule payments to avoid late fees
Prioritize critical suppliers and lenders
Align payment dates with expected incoming cash
Why it matters: Knowing what’s coming lets you avoid “surprise” cash crunches and protect relationships with key suppliers.
6. Payroll and Source Deductions (If Applicable)
For businesses with employees:
Confirm payroll is processed correctly:
Gross pay
CPP/QPP, EI, and income tax withheld
Employer contributions
Check that source deductions are being set aside for remittance to CRA.
Review any benefits or RRSP contributions for accuracy.
Why it matters: Payroll errors and missed remittances are a fast track to CRA penalties, making tight monthly control essential.
7. Sales Tax (GST/HST/PST/QST) Checks
Depending on your province and registrations, you may be dealing with GST, HST, PST, or QST.
Verify that sales tax is:
Charged correctly on sales
Recorded properly on expenses where ITCs (input tax credits) apply
Check your sales tax payable account:
Make sure it reflects what you actually owe for the period
Set aside the sales tax amount in a separate bank account if possible, so you’re not “borrowing” it for operations.
Why it matters: Sales tax isn’t your money. Keeping it clean and separate reduces the risk of being caught short at filing time.
8. Petty Cash and Other Small Balances
Reconcile petty cash or small cash boxes if you use them.
Record:
Small purchases
Tips or change given out
Top up the float if needed and track it in your books.
Why it matters: These amounts may seem minor, but they can create messy gaps if ignored for months.
Monthly Financial Review: Turning Numbers into Decisions
Once the core tasks are done, spend time actually looking at your numbers. This is where the value of bookkeeping shows up.
1. Profit & Loss (Income Statement)
Compare:
This month vs. last month
This month vs. the same month last year (if available)
Scan for:
Sudden jumps in specific expense categories (e.g., “Advertising,” “Repairs,” “Professional Fees”)
Revenue trends: growing, flat, or declining?
Ask:
Which services or products drove most of the revenue this month?
Are margins shrinking because costs quietly increased?
Tie‑in to your previous posts: If you don’t trust your P&L—or it takes a weekend of cleanup to produce it—that’s one of the signs you’ve already identified as a trigger for outsourcing.
2. Balance Sheet
Review assets:
Bank balances
Accounts receivable
Inventory, if applicable
Review liabilities:
Credit cards and lines of credit
Loans and leases
Sales tax payable and source deductions payable
Check owner’s equity to see how much is invested and retained in the business.
Why it matters: The balance sheet shows your overall financial health, not just monthly performance.
3. Basic Cash Flow Snapshot
You don’t need a complex cash flow model to get value. A simple monthly look works:
List:
Expected customer payments for the next 30 days
Expected bills, loan payments, payroll, and tax remittances
Identify:
Weeks where outflows may exceed inflows
Points where you may need to delay non‑essential spending or accelerate collections
Why it matters: Cash flow is where businesses feel pain first. A quick monthly review helps you avoid crises instead of reacting to them.
4. Operational Notes
As you review the numbers, jot down 1–3 key observations each month, such as:
“Software subscription costs up 25%—time to audit tools.”
“Revenue dipped after we paused Google Ads—consider restarting with a smaller budget.”
“Receivables improved; follow up strategy is working.”
These notes become a simple decision log you can refer back to, giving context to your financial trends.
CRA & Compliance Basics: Staying Out of Trouble
Canadian compliance adds extra layers to your bookkeeping. Doing these things monthly keeps you out of the penalty zone.
1. Keep Supporting Documents Organized
Store:
Invoices
Receipts
Bank and credit card statements
Contracts and major agreements
Maintain a consistent system:
Digital folders by year and month
Document attachments in your bookkeeping software
Clear naming conventions (e.g., “2026‑07‑VendorName‑Invoice123”)
Why it matters: If CRA ever reviews your file, being able to quickly show support for your numbers is critical.
2. Track Owner Draws and Personal vs. Business Spending
Separate personal and business expenses clearly:
Avoid running personal purchases through the business account.
If you do, record them correctly as owner draws or shareholder loans.
Review owner transactions monthly to keep your books clean and avoid misclassifying personal costs as business deductions.
Why it matters: Mixing personal and business expenses is a common audit trigger and can lead to denied deductions.
3. Monitor Payroll and Source Deductions Obligations
If you have employees:
Confirm that payroll remittances to CRA are:
Calculated correctly
Submitted on time based on your remittance schedule
Double‑check:
T4 and T4A reporting will be easy at year‑end if monthly records are accurate.
Why it matters: Missed or late remittances can quickly lead to penalties and interest.
4. Keep an Eye on Sales Tax Filing Periods
Even if you only file GST/HST quarterly or annually:
Use your monthly checklist to:
Confirm your sales tax payable balance is reasonable
Catch obvious errors before filing periods arrive
Note upcoming filing deadlines and set reminders well in advance.
Why it matters: Treating sales tax as a monthly responsibility makes quarterly or annual filings far less stressful.
When This Checklist Becomes Too Much
Many Canadian small business owners start with a checklist like this and manage fine—for a while. Over time, growth makes the list heavier.
You may be ready to stop doing your own books if:
You’re consistently 2–3 months behind on reconciliations.
Your “monthly review” is more of a “whenever I get a minute” review.
Tax season still feels like a stressful scramble, even though you know what should be happening.
You’re making decisions based on your bank balance, not on reports you trust.
The thought of adding employees, more locations, or more services makes your bookkeeping workload feel impossible.
These are the same patterns your first two posts described: nights and weekends lost to bookkeeping, foggy numbers, and the realization that a full‑time in‑house bookkeeper doesn’t make financial sense yet.
At that point, an outsourced bookkeeper—like Favaro Bookkeeping Co.—bridges the gap:
AreaYou Doing It AllWith an Outsourced BookkeeperTime & energyNights/weekends finishing this checklistChecklist handled; you review key highlightsConsistencyDepends on your schedule and motivationSame tasks, every month, on a set timetableAccuracy & complianceRisk of errors and missed CRA detailsProcesses built around Canadian requirementsFocusSplit between operations and adminYou stay focused on growth and client service.
If this Monthly Bookkeeping Checklist for Small Business Owners (Canada) feels manageable right now, use it as your monthly routine. Bookmark it, print it, or turn it into a simple recurring task list.
If it already feels heavy—or you’d rather spend your time signing new clients, improving your services, or actually taking weekends off—then it may be time to delegate.
Favaro Bookkeeping Co. can:
Take over this monthly checklist for you
Keep your books clean, current, and CRA‑ready
Provide clear, simple reports so you can make confident decisions
If you’re in that “I know I shouldn’t be doing my own books anymore” stage that your earlier posts describe, consider turning this checklist into a conversation:
Want these monthly tasks off your plate?
Reach out to Favaro Bookkeeping Co. for a free, no‑pressure chat about what monthly bookkeeping support would look like for your Canadian small business.