How Often Should You Do Bookkeeping for Your Small Business?

We could answer this question with another: How much do you enjoy doing your bookkeeping?

Some business owners like to dip into the numbers frequently, doing bookkeeping in small bits as they go, while others prefer not to look at it at all until it’s time to prepare year-end taxes. Ultimately, how often you should do bookkeeping for your small business depends on a number of factors — including your personal preferences. 

Monthly bookkeeping is common for most businesses

Doing your books monthly is a sweet spot between efficiency and up to date data. It doesn’t work for everyone, but it is common for small businesses because:

• Bank and credit card statements are issued monthly, and many DIY bookkeepers rely on the statements to record their transactions.

• It feels less time-consuming to do everything in one batch, once per month.

• They don’t have a high volume of transactions, making monthly bookkeeping doable in a day or less.

That said, there are some drawbacks to monthly bookkeeping that shifting to a weekly schedule can help alleviate, such as a delay in obtaining accurate financial data, a larger monthly time commitment, and a greater risk of inaccuracies due to lost or forgotten transaction details. 

If monthly bookkeeping feels right to you, you might also enjoy: How to Stay Organized for Monthly Bookkeeping: Simple Processes for Small Business Owners

When weekly bookkeeping might be the stronger option 

Yes, weekly bookkeeping requires you to open the books more frequently, but that can be a good thing. Frequently updating the books helps you stay involved and engaged with your business’s finances and can help you catch errors earlier. 

Consider weekly bookkeeping when:

• You have many transactions that would take too much time to manage if left until month-end.

• You rely on up to date data for day-to-day decision-making.

• You want to have more cash flow visibility.

• You feel overwhelmed by the amount of work monthly bookkeeping takes.

Doing bookkeeping weekly (but in shorter bursts) keeps you up to date and helps you stay in the habit, so you’re not having to remind yourself of your system each month.

The case for annual bookkeeping (and issues caused by delays)

Some business owners prefer to do their bookkeeping once per year, all in one shot. This creates certain challenges, such as:

• Forgetting the nature or purpose of transactions that happened earlier in the year

• Missing receipts that become more difficult to track down after time has passed

• Cash flow surprises that occur during the year because the books aren’t up to date

• Year-end stress due to all the digging required to prepare the books for the full year

Annual bookkeeping can work in limited instances. Usually the business would be fairly simple, there would be very few monthly transactions, and income and expenses are consistent throughout the year. One example may be operating a small residential rental building with low tenant turnover — there is little fluctuation in revenues and expenses month-to-month.

A realistic bookkeeping schedule you can follow

One of the best ways to create a consistent bookkeeping routine is to do what you can weekly, and set appointments for yourself for certain monthly or quarterly tasks.

This workflow reflects a weekly bookkeeping approach, which is ideal for most small businesses.  

Weekly bookkeeping tasks

Enter transactions (or review categorizations if your accounts are synced to accounting software) from online bank or credit card statements. Check transactions against invoices and receipts to ensure they’re categorized accurately and have proper context. 

Completing data entry weekly will keep your books more accurate and consistently up to date.

If weekly bookkeeping feels like a lot, you can start by moving just a few tasks to a weekly schedule, such as document gathering. This will help alleviate the monthly bookkeeping load. If you need an idea, here’s a simple weekly routine for organizing your receipts and other documentation.

Monthly bookkeeping tasks

Do your cash and credit card reconciliations monthly, perhaps when statements are issued, to ensure the accuracy of your books and to identify any potential errors. You can also use this time as a reminder to follow up on missing invoices.

This is also a great time to pull your financial reports and review performance, check for aging accounts receivable balances, and take a high-level view of your cash flow.

Quarterly bookkeeping tasks

This is a great checkpoint for reviewing your business’s financial performance at a higher level, especially when your business is seasonal. 

Another key task to complete quarterly is monitoring your estimated income taxes, to help ensure that you’ll have enough cash available to pay taxes when they become due.

For more detailed DIY bookkeeping tips and additional ideas, you may enjoy: Your Guide to Stress-Free Bookkeeping: Streamlining Your Systems and Avoiding Common Mistakes

When extra bookkeeping support makes sense

A consistent routine sets you up for bookkeeping success — the key is choosing one that works best for you, and that takes into account your energy, your financial reporting and decision-making needs, and your weekly and monthly business workflow. 

When you’ve hit a point where your bookkeeping tasks feel like they’re taking over, that’s when it might be time to partner with a bookkeeper. Already there? Let’s get your time back. I provide bookkeeping services that are clear, reliable, supportive, and tailored to your business. Schedule a free consultation with me and let’s discuss how I can be a part of your weekly or monthly bookkeeping cycle.