How Often Do Small Businesses Need Bookkeeping?
Learn how often small businesses should do their bookkeeping. Explore weekly, biweekly, and monthly bookkeeping schedules and find out which approach may be right for your business.
Andrew Kim
10/8/20264 min read
How Often Do Small Businesses Need Bookkeeping?
Keeping your business books up to date is an important part of running a small business. But how often should you actually do your bookkeeping?
For most small businesses, bookkeeping should be done regularly rather than only once a year. Depending on the size and activity of the business, bookkeeping may be completed weekly, biweekly, or monthly.
The right schedule depends on how many transactions your business has, how quickly your business is growing, and how often you need accurate financial information.
How Often Should a Small Business Do Its Bookkeeping?
For many small businesses, monthly bookkeeping is a good starting point.
Monthly bookkeeping typically involves recording and categorizing transactions, reconciling bank and credit card accounts, and reviewing financial reports.
Businesses with a higher volume of transactions may benefit from weekly or biweekly bookkeeping. Very small businesses with limited activity may not need their books updated as frequently, although monthly reviews can still help keep records organized.
The important thing is to establish a consistent schedule and avoid allowing transactions to build up for months at a time.
Weekly Bookkeeping
Weekly bookkeeping can make sense for businesses with a high number of transactions or frequent purchases and sales.
Updating your books every week can help you:
Keep transactions organized
Stay on top of business expenses
Identify errors sooner
Monitor cash flow
Keep receipts organized
Spend less time catching up later
Weekly bookkeeping can also be useful when a business owner wants a more current picture of how the business is performing.
Biweekly Bookkeeping
Some small businesses may benefit from bookkeeping every two weeks.
This can be a practical option for businesses with a moderate number of transactions that want their records updated more frequently than once a month.
A biweekly schedule can also help prevent bookkeeping tasks from becoming overwhelming.
Monthly Bookkeeping
For many small businesses, monthly bookkeeping provides a good balance between staying organized and keeping bookkeeping costs reasonable.
Monthly bookkeeping can include:
Categorizing income and expenses
Reconciling bank accounts
Reconciling credit cards
Recording transactions
Reviewing accounts
Preparing financial reports
Identifying unusual or missing transactions
Having your books updated every month also gives you an opportunity to review your business's financial performance throughout the year.
Instead of waiting until tax season to discover how your business performed, you can review your financial information regularly.
What Happens If You Only Do Bookkeeping Once a Year?
Some business owners wait until tax time to organize their books.
While it may be possible to catch up on a year's worth of bookkeeping, this approach can create several problems.
You may have difficulty remembering what certain transactions were for, lose receipts, overlook errors, or discover that your records need significant cleanup.
You also lose the benefit of having current financial information throughout the year.
If you only review your books once a year, you may not know that expenses have increased, revenue has changed, or cash flow is becoming a problem until much later.
How Often Should You Reconcile Your Bank Account?
Bank accounts should generally be reconciled regularly as part of your bookkeeping process.
For many small businesses, monthly bank reconciliation is appropriate.
Reconciling your accounts helps make sure the transactions recorded in your bookkeeping system agree with the transactions reported by your bank.
Regular reconciliation can help identify:
Missing transactions
Duplicate transactions
Incorrect amounts
Unrecorded fees
Timing differences
Other bookkeeping errors
The more frequently you reconcile your accounts, the sooner you can identify potential problems.
How Often Should You Review Financial Reports?
Small business owners should consider reviewing their financial reports at least monthly.
A monthly review can give you a clearer picture of:
Revenue
Expenses
Net income
Cash flow
Changes in spending
Overall business performance
The exact reports you need will depend on your business, but a Profit and Loss Statement and Balance Sheet are commonly useful.
Regular financial reporting turns bookkeeping from simply recording transactions into a useful tool for making business decisions.
How Often Should You Do Bookkeeping If Your Business Is Very Small?
A business with only a small number of transactions may not need weekly bookkeeping.
However, that does not mean bookkeeping should be ignored.
If your business has relatively few transactions, monthly bookkeeping may be enough to keep your records current without spending unnecessary time on bookkeeping.
Even a small business can benefit from having organized financial records and knowing how the business is performing.
What About a Growing Business?
As your business grows, your bookkeeping needs may change.
You may have more customers, more expenses, additional bank accounts, employees, or significantly more transactions.
A bookkeeping schedule that worked when you had 30 transactions per month may no longer be appropriate when you have several hundred.
Review your bookkeeping process as your business grows and adjust the frequency when necessary.
A Simple Bookkeeping Schedule for Small Businesses
For many small businesses, a basic schedule could look like this:
Weekly
Collect and organize receipts
Review new transactions
Keep business records organized
Monthly
Categorize transactions
Reconcile bank and credit card accounts
Review financial reports
Check for missing or unusual transactions
Yearly
Review the full year's records
Prepare information for your accountant or tax professional
Make sure outstanding bookkeeping issues have been addressed
Businesses with more complex operations may need to perform these tasks more frequently.
The Bottom Line
Most small businesses should not wait until tax time to do their bookkeeping.
For many businesses, monthly bookkeeping is a practical and effective schedule. Businesses with higher transaction volumes may benefit from weekly or biweekly bookkeeping, while very small businesses may have fewer bookkeeping tasks to manage.
The key is consistency.
Keeping your books current can help you understand your business's financial position, identify problems earlier, and make better decisions throughout the year.
If bookkeeping is taking too much of your time or your records have fallen behind, outsourcing the work can allow you to focus more of your time on running your business.
