A Monthly Bookkeeping Checklist for London Small Businesses

Bookkeeping goes wrong in one way more than any other: it gets left. A few weeks become a few months, and suddenly the VAT return is due, the bank doesn't reconcile and nobody can remember what a payment from March was for.

The fix is a routine. This checklist sets out what to do and when, so your numbers are always ready when you need them. It assumes you're using cloud software such as Xero with bank feeds connected, which we'd recommend to any London business.

Every week

• Categorise new bank transactions while you still remember what they were
• Capture receipts straight into your software with a phone app, then throw away the clutter
• Send invoices as soon as work is done or goods are delivered
• Enter supplier bills and check them against what you ordered
• Look at who owes you money and follow up anything overdue

Every month

1. Reconcile every account: bank accounts, credit cards, and payment platforms such as Stripe, PayPal, Square or SumUp. The balance in your software should match the statement exactly.
2. Chase overdue invoices properly, by phone if emails haven't worked.
3. Review bills due and schedule supplier payments.
4. Run payroll and pension submissions, and pay HMRC by the 22nd if you pay electronically.
5. Check your rolling 12-month turnover if you're not VAT registered. If it's getting close to £90,000, read our VAT registration guide.
6. Review your profit and loss against the month before and the same month last year.
7. Check your cash position and look ahead at the next two or three months.
8. Set aside money for tax: VAT, PAYE, and an estimate of corporation tax or income tax.

Every quarter

• Prepare and file your VAT return, due 1 month and 7 days after the quarter ends
• Send your Making Tax Digital quarterly update if you're a sole trader or landlord in MTD. Our MTD guide explains who is affected
• Review your pricing and margins, especially if your costs have changed
• Update your cash flow forecast for the rest of the year
• Estimate your tax bill for the year so far, so there are no surprises

Every year

• Agree a year-end timetable with your accountant well before the deadline
• Count stock at the year end if you hold any
• Review fixed assets and write off anything you no longer have
• Check customers who'll never pay and write off bad debts
• Plan directors' pay: salary, dividends and pension contributions, before the year end rather than after
• Diarise every deadline for the coming year. Our limited company deadlines guide lists them

Signs your bookkeeping is falling behind

• the bank hasn't been reconciled for more than a month
• you're not sure who owes you money or how much
• VAT returns are prepared in a rush
• the balance in your software doesn't match the bank
• you make decisions based on the bank balance alone

If two or more of these sound familiar, it's usually quicker to get help catching up than to keep putting it off.

Keep your records safe

Limited companies must generally keep records for at least 6 years from the end of the financial year they relate to. Sole traders must keep them for at least 5 years after the 31 January filing deadline for the tax year. Cloud software keeps everything in one place, backed up, and accessible to your accountant.

Hand the checklist over

If the routine above is the part of running your business you'd most like to stop doing, our outsourced bookkeeping service covers all of it, from a few hours a month to two or more days a week, with a dedicated account manager who knows your business. Get in touch and we'll talk you through how it works.