Before You Start

This guide assumes you have administrator access to QuickBooks Online and that all bank and credit card accounts are already reconciled.

Overview

30 min
Estimated Time
Intermediate
Difficulty
Monthly
Frequency

What You’ll Learn

  • How to prep your QuickBooks for an efficient close
  • Reconciling all balance sheet accounts
  • Reviewing profit & loss accounts for misclassifications
  • Locking the accounting period and generating reports

1. Preparation Steps

Before beginning the close, ensure these preliminary tasks are completed:

Required Preliminary Tasks

  • All bank accounts reconciled
  • All credit card accounts reconciled
  • Accounts Receivable (AR) matches sub-ledger
  • Accounts Payable (AP) matches sub-ledger

Optional (but recommended)

  • Inventory counts verified
  • Payroll liabilities cleared
  • Fixed asset additions recorded

2. Key Areas of Focus

An effective month-end close focuses on two main financial statements.

Balance Sheet Review

This ensures the accuracy of your assets, liabilities, and equity.

Pros:
  • Ensures asset and liability accuracy.
  • Crucial for financial health.
  • Detects missing entries or errors.
Cons:
  • Can be time-consuming without a process.
  • Requires detailed sub-ledger checks.
  • Errors impact future periods.

Profit & Loss Review

This focuses on the accuracy of your revenue and expenses.

Expert Tip: Focus on comparing current month to prior month or budget for unusual spikes or drops in income/expenses. This helps identify misclassifications quickly.

3. Step-by-Step: Month-End Workflow

Here is the high-level workflow for a clean month-end close.

// Example of a closing journal entry for depreciation
const journalEntry = {
  date: "2025-10-31",
  accounts: [
    { name: "Depreciation Expense", type: "Debit", amount: 250.00 },
    { name: "Accumulated Depreciation", type: "Credit", amount: 250.00 }
  ],
  description: "Monthly depreciation expense"
};
console.log(JSON.stringify(journalEntry, null, 2));

4. Performing the Close

  1. 1

    Reconcile All Accounts

    Ensure every balance sheet account has been reconciled up to the end of the month, including loans and other liabilities.

  2. 2

    Review P&L Accounts

    Scrutinize income and expense accounts for mispostings or unusual amounts. Make reclassification journal entries as needed.

  3. 3

    Adjusting Journal Entries

    Post any necessary adjusting entries such as depreciation, accrued expenses, or deferred revenue to match the accrual basis of accounting.

  4. 4

    Generate Reports

    Generate your key financial statements (P&L, Balance Sheet, Statement of Cash Flows) and review them for consistency and reasonableness.

  5. 5

    Close the Books

    Once satisfied, close the accounting period in QuickBooks with a closing date password to prevent accidental changes to prior months.

Common Error: Not Locking the Period

Failing to lock the period allows past entries to be altered, leading to discrepancies in future reports and difficult reconciliations. Always set a closing date password.

5. Post-Close Review

Final Review Checklist

  • Verify Balance Sheet matches prior month’s ending balance
  • Confirm Net Income on P&L matches on Balance Sheet
  • Review retained earnings balance for accuracy
  • Distribute final reports to stakeholders

Need Help?

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Performing an accurate month-end close can be complex. Our experts are here to help streamline your process.

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