Bookkeeping
Monthly bookkeeper: what a monthly close includes, step by step
What a monthly bookkeeper does: recording and categorizing transactions, the IRS's bank reconciliation steps, monthly statements, the records to keep and for how long, plus how a bookkeeper differs from an accountant, with BLS pay data.
Prepared by Aldro Accounting · Updated · Sources checked
The quick answer
A monthly bookkeeper records the month's transactions, posts debits and credits to the general ledger, reconciles the bank account and produces reports such as an income statement and balance sheet. IRS Publication 583 says to reconcile your business checking account each month so the bank statement, checkbook and books agree, and the Bureau of Labor Statistics puts the median bookkeeping clerk wage at $50,670 a year (May 2025).
What a monthly bookkeeper does
The Bureau of Labor Statistics (BLS) says bookkeeping, accounting and auditing clerks compute, classify and record data to help organizations keep complete and accurate financial records. Bookkeepers are often responsible for some or all of an organization's accounts, known as the general ledger. They record all transactions, post debits and credits, and produce financial statements and other reports.
BLS adds that bookkeepers prepare bank deposits and may handle payroll, purchases, invoices and overdue accounts. Some are full-charge bookkeeping clerks who maintain an entire organization's books. They use specialized accounting software, spreadsheets and databases.
- Enter (post) financial transactions into accounting software
- Assign costs (debits) and income (credits) to the right accounts
- Produce reports such as balance sheets, income statements and totals by account
- Check figures, postings and reports for accuracy
- Reconcile records, or note and report differences
What a monthly close includes
The IRS says your recordkeeping system should include a summary of business transactions, ordinarily made in accounting journals and ledgers, and your books must show gross income, deductions and credits. A monthly close turns the month's activity into that summary:
- Gather the month's supporting documents: sales slips, paid bills, invoices, receipts, deposit slips and canceled checks
- Record receipts and disbursements in the journals, then post them to ledger accounts
- Check that total debits equal total credits after posting (in a double-entry system)
- Reconcile each bank account to the statement
- Produce the income statement and balance sheet for the month
The monthly bank reconciliation, the IRS way
Publication 583 says to keep the business checking account separate from your personal account and to reconcile it each month. Reconciling verifies how much money is in the account, makes sure the books reflect all bank charges and the correct balance, and catches errors in the statement, checkbook or books.
First check your own figures: start with last month's ending checkbook balance, add the month's total deposits and subtract total disbursements. The result should match the checkbook balance at month end. Then reconcile with the bank statement:
- Compare the deposits on the bank statement with the deposits in your checkbook and note differences
- Compare each canceled check, by number and amount, with your checkbook and mark it cleared
- Checks not marked as cleared are your outstanding checks
- Prepare a bank reconciliation
- Update the checkbook and journals for items not recorded, such as service charges, or recorded incorrectly
The monthly statements
Publication 583 says good records are needed to prepare accurate financial statements. An income statement shows the business's income and expenses for a period. A balance sheet shows its assets, liabilities and the owner's equity on a given date.
In a double-entry system, transactions go first into a journal and are then posted to ledger accounts for income, expenses, assets, liabilities and net worth. Total debits must equal total credits after posting. Income and expense accounts are closed at the end of each tax year, while asset, liability and net worth accounts stay open.
A single-entry system is simpler. It is based on the income statement and records income and expenses with a daily summary of cash receipts and monthly summaries of cash receipts and disbursements. Publication 583 says it can be a practical system when starting a small business.
Accounting method and separate books
Under the cash method, income is reported in the tax year it is received and expenses are deducted or capitalized in the year they are paid. Under an accrual method, income is generally reported in the year it is earned and expenses in the year they are incurred, whether or not they are paid that year.
If you own more than one business, Publication 583 says you must keep a complete and separate set of books and records for each one.
Documents behind each entry
The IRS says expense documents should identify the payee, the amount paid, proof of payment, the date incurred and a description showing the amount was for a business expense. Without a canceled check, certain financial account statements prepared by financial institutions can prove payment.
Electronic records count the same. The IRS says all requirements that apply to hard copy books and records also apply to electronic records.
Tax work that depends on monthly books
Clean monthly books feed several federal filings that Publication 583 describes:
- Estimated tax: generally required if you expect to owe $1,000 or more when you file, using Form 1040-ES
- Self-employment tax: Schedule SE if net earnings from self-employment were $400 or more
- Payroll: Social Security, Medicare and withheld income tax on Form 941 (quarterly) or Form 944 (annual)
- Federal tax deposits: all made by electronic funds transfer, generally through EFTPS
- Contractor payments: Form W-9 to get the payee's SSN or EIN, and possible backup withholding if they don't provide one
How long to keep the records
The IRS ties record retention to the period of limitations for each return. Employment tax records are kept for at least 4 years after the tax becomes due or is paid, whichever is later. Records connected to property are generally kept until the period of limitations expires for the year you dispose of it.
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| Situation | Keep records for |
|---|---|
| General rule for income tax returns | 3 years |
| Claim for credit or refund after filing | 3 years from filing or 2 years from paying the tax, whichever is later |
| Unreported income over 25% of gross income shown | 6 years |
| Loss from worthless securities or bad debt deduction | 7 years |
| No return filed, or a fraudulent return | Indefinitely |
| Employment tax records | At least 4 years after the tax is due or paid, whichever is later |
Monthly bookkeeper vs accountant
BLS describes different jobs. Bookkeepers record transactions, keep the general ledger and reconcile accounts. Accountants and auditors examine financial statements for accuracy and compliance with laws, compute taxes owed and prepare tax returns, and inspect accounting systems for efficiency and fraud risk.
BLS also expects the roles to shift. With more routine tasks automated, bookkeeping clerks are expected to take on a more analytical and advisory role.
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| Measure | Bookkeeping, accounting and auditing clerks | Accountants and auditors |
|---|---|---|
| Median pay, May 2025 | $50,670 per year ($24.36 per hour) | $83,680 per year ($40.23 per hour) |
| Lowest 10% / highest 10% | Under $36,000 / over $74,550 | Under $56,020 / over $144,090 |
| Typical entry-level education | Some college, no degree | Bachelor's degree |
| Projected change, 2025 to 2035 | -6% | +5% |
| Openings per year, on average | About 144,100 | About 115,300 |
A monthly close for a flat price
Aldro's bookkeeping is $20 a month and covers unlimited bank and card accounts, monthly reconciliation and statements. Payroll processing and sales-tax filing aren't included, and the year-end return is covered separately by one flat yearly tax price that our team prepares and files.
Worked example
Say a business ended last month with $12,400 in its checkbook. This month it deposited $18,250 and paid out $15,730, so the checkbook should show $12,400 + $18,250 - $15,730 = $14,920. The bank statement shows $16,335. Two checks totaling $1,450 haven't cleared, so the adjusted bank balance is $16,335 - $1,450 = $14,885. The statement also shows a $35 service charge that isn't in the books, so the adjusted checkbook balance is $14,920 - $35 = $14,885. The two adjusted balances match, the $35 charge is recorded in the journals, and the month's statements can be produced from reconciled books.
Common questions
What does a monthly bookkeeper do?
Records the month's transactions, posts debits and credits to the general ledger, reconciles accounts and produces reports such as balance sheets and income statements. BLS says bookkeepers may also handle payroll, purchases, invoices and overdue accounts.
How often should a business reconcile its bank account?
IRS Publication 583 says to reconcile your checking account each month, so the bank statement, checkbook and books agree.
What records does a bookkeeper need to keep for the IRS?
Supporting documents such as sales slips, paid bills, invoices, receipts, deposit slips and canceled checks. Expense documents should show the payee, amount, proof of payment, date and a description of the business purpose.
What's the difference between a bookkeeper and an accountant?
BLS says bookkeepers record transactions and keep the general ledger, while accountants and auditors examine financial statements, compute taxes and prepare returns. Median pay in May 2025 was $50,670 for bookkeeping clerks and $83,680 for accountants and auditors.
How long should bookkeeping records be kept?
Generally 3 years for income tax records, 6 years if more than 25% of gross income went unreported, 7 years for bad debt or worthless securities claims, and at least 4 years for employment tax records.
The cheapest way to get your business taxes done: $399 flat.
Business tax filing is $399 USD a year, and it covers everything tax for that year.
How it works
- Tell us about your business. A two-minute form. No payment is collected through it.
- Get your next steps by email. We’ll email you the next steps within one business day. After you sign up we’ll send you a secure upload link for your documents.
- We file it. Our team prepares and files your return. Add bookkeeping for $20 a month if you want it.
What's included
$399 a year covers everything tax for that tax year.
- Every business return for the year. All the federal and state or provincial business returns you need for the tax year: Schedule C, 1065, 1120-S, 1120 and their state returns in the US; T2, or T1 with T2125, in Canada.
- More than one state. Multi-state returns are included at the same price.
- Your personal return. The owner’s personal return (1040 or T1) is included when it’s needed for the business income.
- Quebec. Quebec returns (CO-17, TP-1 and TP-80) are included. Our Quebec pages are in French, and our team works with you in English.
- Extensions and reminders. Extensions (Form 7004 or 4868) and quarterly estimate reminders are included.
- Information returns. 1099-NEC, T4/T4A and T5018 slips are included in the tax price.
- City and excise returns. City and local business tax returns, and state excise returns such as Washington B&O, are included in the yearly price.
- Franchise tax reports. State franchise tax reports, such as the Texas franchise tax report, are included.
- Estimated tax and instalment amounts. We work out your quarterly estimated tax payments in the US, or your CRA instalments in Canada, and tell you what to pay and when.
- Unfiled past years. Each unfiled prior-year return is $399 per tax year, the same flat price.
- Bookkeeping at $20 a month. Unlimited bank and card accounts, monthly reconciliation and monthly statements.
Basic inventory tracking for online stores, such as Shopify, is included. Full cost-of-goods reconciliation is quoted separately. Payroll processing and sales-tax filing aren’t included in bookkeeping. Prices are in USD. Our team prepares and files your return.
Sources
- BLS: Bookkeeping, accounting, and auditing clerks · checked October 31, 2026
- BLS: Accountants and auditors · checked October 31, 2026
- IRS: What kind of records should I keep · checked October 31, 2026
- IRS: Publication 583 (PDF) · checked October 31, 2026
- IRS: Publication 583, Starting a business and keeping records · checked October 31, 2026
- IRS: How long should I keep records · checked October 31, 2026
This guide explains general rules from the sources listed. It isn’t tax advice for your situation.