How to Avoid Stress for the 2021 Tax Season: A Monthly and Quarterly Bookkeeping Tasks Checklist
January 11, 2021

Have you mastered your weekly bookkeeping tasks checklist and are now wondering what’s next to prepare you for the dreaded tax season?  

Are you hoping someone will just take over all your bookkeeping tasks so that you can stop learning and focus on the services you provide?  Well, I’m here to help you! 

This is the 2nd post in a three-part series of bookkeeping checklists that will help you get started with your bookkeeping tasks.  Click here to read our previous blog post about our weekly bookkeeping tasks list.

This post will help you avoid stress and confusion by providing you with a monthly and quarterly bookkeeping tasks checklist.  

Our checklist will help you set up a bookkeeping schedule so that you can feel confident that you’re on the right track for the 2021 tax season. 

Why Does Your Business Need a Monthly and Quarterly Bookkeeping Tasks Checklist?

Did you know that you can take advantage of the power of compounding just by keeping up with your bookkeeping tasks checklist on a scheduled basis?  Not only does this apply to the money in your business but to life itself as well.

“Compound interest is the eighth wonder of the world.  He who understands earns it; he who doesn’t, pays it.” - Albert Einstein.
Compounding

But how can this help your business?  By keeping up with your scheduled business and bookkeeping tasks checklist day after day, you will take advantage of the power of compounding.  In business, Sage advises this advantage will help you:

   1.    Add value both to your business and your customers

   2.   Understand value discipline across pricing, cost of sales, and dealing with debtors and creditors

   3.   Make changes at the right time to keep your business moving in the right direction.

You will build a strong wall if you lay all of the bricks properly day after day – and it’s no different for your business.

No matter how small the tasks might seem, the compound effect always takes over and will benefit you in the long run.  

It’s essential to make sure you keep up with your weekly, monthly, and quarterly bookkeeping tasks checklists so that you can keep your business moving in the right direction and prepare for your year-end tasks.  This will make the upcoming tax season a breeze. 

How Do You Do Monthly and Quarterly Bookkeeping?

At the end of each month, make sure to reconcile your statements, review receivables, profits, and expenses, and inventory – if you’re ahead of the game, you can fix things that come up as you go.  

If you wait until the end of the year to review your financials, it will be a lot harder to change the course of your business or to correct any transaction errors.

At the end of every quarter, review and satisfy your tax obligations, and analyze your estimated profits and losses so that you can make adjustments to meet your goals.  

The following monthly and quarterly checklists will help you succeed in your business – by helping you complete essential tasks so that you can take advantage of the power of compounding.  

Here they are at a glance, and we will go over them in more detail below:

Monthly and Quarterly Bookkeeping Tasks Checklist

Monthly Bookkeeping Tasks Checklist

Your monthly bookkeeping tasks include going over everything that’s gone on during that month.  You will remain in control of your bookkeeping by reviewing your financials every month and making changes where necessary. 

1. Reconcile Bank and Credit Card Statements

It’s important to compare your financial records against your business’s bank and credit card statements so that you can make sure all entries are correct.   

The sooner you identify errors, the quicker and easier it will be to fix them.  These could be accounting or even fraudulent errors. 

It’s also essential to review and reconcile your bank statement to know how much cash you have on hand at the end of the month.  

Your ending bank balance will be the start of your reconciling process for the next month.

2. Review Past-due Receivables

It’s best practice to review your accounts receivables every month and send reminders to clients at the beginning of the month.  If you’re using bookkeeping software, you will generate a report to show unpaid invoices. 

If you are not using bookkeeping software for this purpose, a simple spreadsheet will do.  Be sure to include an “aging” column in your regular spreadsheet to show the difference between recent invoices and those that are past due.

It’s crucial to stay on top of past due invoices as you will need to re-evaluate all invoices at the end of the year to decide whether you think they will get paid or whether you will need to write them off. 

3. Process and Review Payroll (if Applicable)

If you have multiple employees and manage payroll yourself, you need to meet all payroll processing timelines and make applicable tax payments.   

If you are currently running your business on your own but are looking to expand, you might want to consider hiring a payroll professional to take on this task. 

4. Review your Business Finance Reports

It’s important to know where your business stands at the end of every month; this way, you can tweak what you need to keep things moving in the right direction.

Bookkeeping Checklist

Review your income statement, budget, and balance sheet and compare it to prior years. 

If you’re using bookkeeping software and updating your financials every week, you will be able to generate these reports very quickly.

Compare Income Statement v. Budget 

Your income statement (also referred to as a profit and loss statement) identifies your business’s current position and whether it’s profitable or losing money.   

Your current income statement and your year-to-date statement tells you how much you’ve earned in your business and how much you’ve spent.  

If you’ve created a budget for your business, compare your income statement to your budget to see what you need to cut back on for the next month (if possible).  If you haven’t prepared a budget, compare it to an income statement from a previous time frame. 

Compare Balance Sheet to Previous Month

Your balance sheet tells you your company’s net worth as it sets out:

   1.    Assets

   2.    Liabilities

   3.    Owner’s equities. 

By comparing your balance sheet from the current month to previous periods, you can get a snapshot of different aspects of your business.  

By keeping up with reviewing your balance sheet, you will be able to make changes if necessary. For example, if you see that your accounts payable is high, you may notice that you were paying bills faster in a previous period. 

You will quickly get yourself back on track by identifying and implementing these changes right away.

Quarterly Bookkeeping Tasks Checklist

Your quarterly bookkeeping tasks deal with your business's big picture and are very important to ensure your success for the next quarter.  You will be making payments and estimates at the end of each quarter.

1. Review Annual Income Statement Estimate 

Similar to above, you would now review your updated annual income statement.  Identify how much money you’re making (and how much profit you’re spending), and pay attention to changes in your revenue and expenses.   

This step will help you identify changes for the next quarter to reach your year-end estimates successfully. 

2. Review Taxable Supplies (and Make Payments)

As mentioned in our weekly bookkeeping tasks checklist post, if you are a business earning more than $30,000.00, you are no longer considered a small supplier and must make HST/GST payments.  

The CRA generally assigns an annual reporting period, but a business can also report more frequently. 

When and if the total revenue from taxable supplies goes above the $1.5 million threshold, you must report every quarter. 

When and if your business’s taxable supplies surpass $6 million, you must report monthly.  

2021 Tax Season

It’s important to note that if your net tax (including HST or income tax) owing for the previous year was more than $3,000.00, quarterly instalment payments are required for the current year regardless of whether you’ve registered as a yearly remitter. Failing to pay quarterly instalment payments will result in penalties and interest.  

3. Estimate Income Tax (and Make Payments)

As you have revenue come in, it’s essential to set aside money for income taxes.  As also mentioned in our weekly bookkeeping tasks checklist post, avoid year-end surprises by estimating the income tax owed each time you earn revenue.   

Every quarter, estimate taxes owed on all revenue (25-30% of business income) and make sure you’ve set aside enough money.

As mentioned above, if your income tax payable for the previous year exceeded $3,000.00, you will need to make quarterly instalment payments in order to avoid interest and penalties. 

In Canada, the deadline to file your income tax return and pay your taxes is April 30, 2021. 

If you or your spouse are self-employed, the deadline to file your taxes is June 15, 2021, but all taxes owed must still be paid by April 30, 2021.

The Bottom Line 

If you follow these simple monthly and quarterly bookkeeping tasks checklist, you will be in a good position when it comes to tax season.  

Be sure to keep an eye on your business finances, reports, taxes owed, and reporting periods, and you’ll be in good shape.  

Are you thinking you’re way behind and have no idea how you can catch up with these tasks in time for the upcoming tax season?  

Hire help now to get things in order well in advance of the deadlines.  Contact us today, and we can discuss how we can save you time and stress by getting you and your business organized.

- DA Eugenie

Dae Writer

Dayna Ann Eugenie is a freelance writer for hire who offers blogging/website content services.  She uses her knowledge and research skills to write educational content focused on digital marketing technology and also writes content in ANY niche with digital marketing aspects in mind.  When she’s not busy writing, you can find Dayna Ann sweating doing functional training exercises, on a road trip adventure, or eating delicious food.  Check out her writer website, find her on Twitter, or connect with her on LinkedIn to learn more about how she can help you with your writing needs!

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