Your Monthly Close: The Business Owner's Review Guide

Your bookkeeper sends you financial statements every month. The question is: are you reading them?

Professional bookkeeping provides the technical foundation, accurate transaction recording, proper reconciliation, and compliant documentation. But getting maximum value from that investment requires your active engagement. Here's your guide to reviewing monthly financials like a pro:

Know Your Business Structure (And What Should Appear in Your Books)

One of the most common questions we hear: "Should I be an S-Corp?" The answer affects what you should see in your monthly financials.

If you're a sole proprietor or LLC taxed as a partnership, your owner compensation isn't a business expense. According to the IRS, draws you take are distributions of profit, not salary. Your profit and loss statement should not show the owner salary as an expense. If it does, your books are set up incorrectly and your profit is understated.

If you're an S-Corporation, you're an employee of your company. The IRS requires S-Corp owners who work in the business to pay themselves reasonable W-2 wages. These wages are legitimate business expenses that should appear on your P&L every single month, consistently. Sporadic or missing payroll expenses indicate a recording problem your bookkeeper needs to address.

Work with your bookkeeper to ensure your chart of accounts matches your business structure. This isn't optional configuration, it's foundational to accurate financial reporting.

Review Payroll for Consistency and Accuracy

If you have employees or you're an S-Corp owner, payroll deserves close attention during monthly review. Look for two things:

Consistency: Does payroll expense appear every month at roughly the same amount? If you see gaps or wild fluctuations without obvious explanation (like seasonal hiring), ask your bookkeeper why. The issue might be recording problems, not actual payroll changes.

Gross versus net wages: Your P&L should reflect gross wages (total compensation before withholdings), not net wages (take-home pay). If your payroll line seems low compared to what you know you're paying, this might be the issue.

Check Income for Common Errors

Most business owners scrutinize expenses while income errors slide by unnoticed. Yet income mistakes can be significant and harder to correct later.

Compare month to month: Pull up a 12-month P&L comparison. Does this month's income make sense compared to recent trends? Unusual spikes warrant investigation. Maybe you had a genuinely great month, or maybe a business loan deposit got coded as income, inflating your revenue and your tax liability.

Compare to your operational records: Cross-reference QuickBooks income with your CRM, point-of-sale system, or invoicing software. Discrepancies indicate sync issues or missed transactions your bookkeeper needs to resolve.

Review large deposits: Scan your bank deposits and verify how they're coded in QuickBooks. Transfers between accounts, loan proceeds, and owner contributions aren't income. If they're coded as such, your books are wrong.

Focus on Stand-Out Categories

You don't need to examine every line item monthly, but watch for categories that jump out. Software expenses suddenly tripled? New line items you don't recognize? Regular expenses that disappeared?

These anomalies don't always indicate problems. Maybe you prepaid an annual subscription. Maybe you had legitimate one-time costs. But they warrant verification with your bookkeeper to ensure accuracy.

Leverage the 12-Month Comparison

The most valuable report for strategic review is a P&L showing 12 months side by side. This view reveals patterns individual months can't show: seasonal trends, expense creep, growth trajectories, and one-time events that skew monthly results.

Understand Why Different Perspectives Matter

"Why didn't my bookkeeper catch this?" is a question that reveals a misunderstanding of roles.

Your bookkeeper ensures technical accuracy: proper recording, reconciliation, categorization for tax compliance, and workflow completion. They can't read your mind about whether transactions are business or personal, whether unusual charges are legitimate, or whether missing expenses were intentionally skipped or forgotten.

You provide business context: operational reality, strategic changes, clarification on ambiguous transactions. As noted in research on entrepreneurial financial literacy, business owners must engage with their numbers, not just delegate financial management entirely.

Your CPA adds tax perspective: compliance requirements, strategic planning, year-end optimization.

All three perspectives working together create complete, accurate, actionable financial intelligence.

Address Uncategorized Items Immediately

If your P&L shows "uncategorized expense" or "uncategorized income," that means your bookkeeper needs information from you. These transactions sit in limbo because they're unclear from bank descriptions alone.

Don't let these pile up. A few items needing clarification is normal. Twenty uncategorized transactions spanning months indicates a communication breakdown that's making your financial statements incomplete and unreliable.

Partnership Produces Clarity

Professional bookkeeping isn't a "set and forget" service. It's a partnership between technical expertise and business knowledge. Your bookkeeper handles the specialized work you shouldn't attempt yourself. You engage with the results, provide necessary context, and use the insights to run your business better.

That partnership, executed well, transforms bookkeeping from a compliance obligation into a strategic advantage.

Sources

1. Internal Revenue Service. "Sole Proprietorships." IRS.gov. Accessed December 2025. https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships

2. Internal Revenue Service. "S Corporation Compensation and Medical Insurance Issues." IRS.gov. Accessed December 2025. https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues

3. Intuit QuickBooks. "Guide to Payroll Accounting." QuickBooks Resource Center. Accessed December 2025. https://quickbooks.intuit.com/r/payroll/guide-to-payroll-accounting/

4. American Institute of Certified Public Accountants. "Financial Reporting Framework for Small- and Medium-Sized Entities." AICPA-CIMA. Accessed December 2025. https://www.aicpa-cima.com/resources/article/financial-reporting-framework-for-small-and-medium-size-entities

5. Harvard Division of Continuing Educat

   ion. "Turning Financial Literacy into Business Strategies." Harvard Professional Development Blog. July 2025. https://professional.dce.harvard.edu/blog/turning-financial-literacy-into-business-strategies/

Ironwood Bookkeeping provides professional bookkeeping services for Dallas-Fort Worth small businesses. We deliver accurate monthly financials and help clients understand what their numbers mean. Learn more at www.ironwoodbookkeeping.com.