Good Bookkeeping Checklist
A monthly health check for your QBO books covering bank feeds, reconciliation, balance sheet, AR, and IRS/FTB obligations. 20 minutes to verify your books are actually in good shape.
Use this checklist once a month to verify your books are actually in good shape — whether you're reviewing your bookkeeper's work or managing the books yourself. Each item describes what "good" looks like and how to check it in QBO.
This is a health check, not a task list.
Bank Feeds & Transactions
Banks are connected and syncing.
All bank accounts and credit cards should have an active feed pulling transactions in. A disconnected feed means transactions have stopped flowing — your books are falling behind without you realizing it.
In QBO: Transactions > Bank transactions. Check that the "Last updated" date on each account tile is recent (within the last 1–2 days). Reconnect any that have dropped.
No transactions sitting unreviewed in the feed.
The "For review" tab should be empty or close to it. Unreviewed transactions haven't been categorized — they're not in your books yet.
In QBO: Transactions > Bank transactions > For review tab. A large backlog means categorization is behind.
No transactions missing supporting documentation.
Every expense should have a receipt or invoice attached. Undocumented transactions are an IRS audit risk and may not be deductible.
In QBO: Run a Transaction Detail by Account report and scan for expense transactions with no attachment.
Reconciliation
All accounts are reconciled to last month's statement.
Bank accounts, credit cards, and lines of credit should all be reconciled monthly. Unreconciled accounts mean errors may exist and haven't been caught.
In QBO: Reports > Reconciliation Reports. Confirms the last reconciled date and ending balance for each account.
No forced reconciliation adjustments.
If a reconciliation was completed with an unexplained difference, something is wrong in the books. These show up as "Reconciliation Discrepancy" entries.
In QBO: Check the Reconciliation Reports for any Reconciliation Discrepancy entries — these are forced adjustments that shouldn't exist.
Balance Sheet Health
Nothing sitting in Opening Balance Equity.
Opening Balance Equity is a QBO holding account used when accounts are first set up. Any balance here means transactions were entered improperly during setup and haven't been correctly allocated. It should be zero.
In QBO: Balance Sheet report > Equity section. Any balance in "Opening Balance Equity" needs to be investigated and reclassified.
No unexpected negative balances.
Most asset accounts shouldn't be negative. A negative bank balance means more payments were recorded than deposits — usually a data entry error. Negative accounts receivable or inventory balances signal a recording problem.
In QBO: Balance Sheet report. Scan asset accounts for any negative numbers.
No inflated accounts from miscategorization.
If expenses are being dumped into catch-all accounts ("Other Expenses," "Miscellaneous," "Ask My Accountant") rather than proper categories, your P&L isn't useful and deductions may be wrong.
In QBO: Profit & Loss report. Click through any account with a large or unexpected balance to see the underlying transactions.
Undeposited Funds balance is zero or near-zero.
Undeposited Funds is a temporary holding account for payments not yet deposited at the bank. A large or growing balance usually means payments were recorded twice.
In QBO: Balance Sheet > Current Assets > Undeposited Funds. Should be zero unless you have checks physically in hand waiting to be deposited.
Accounts Receivable & Payable
No stale open invoices in AR.
Invoices sitting open for 60+ days may have been paid but not matched — or are genuinely uncollected and need follow-up.
In QBO: Reports > Accounts Receivable Aging Summary. Investigate anything 60+ days old.
Sales tax codes applied correctly.
Taxable transactions should have sales tax applied. Exempt transactions should be coded as exempt. Mismatched codes mean you're either collecting tax you won't remit or missing tax you owe.
In QBO: Run a Transaction Detail by Account filtered by revenue accounts. Look for transactions where the tax code doesn't match the nature of the sale.
Payroll liabilities balance is clearing after each payroll tax deposit.
This account should drop close to zero after each federal and state payroll tax deposit. A growing balance means deposits may not be going out on time — which triggers IRS and EDD penalties.
In QBO: Balance Sheet > Current Liabilities > Payroll Liabilities.
IRS & FTB
No outstanding letters or notices.
The IRS and California FTB send letters for assessments, audit requests, missing filings, and unpaid balances. These have strict response deadlines — ignoring them can result in the agency proceeding without your input.
Check: IRS Online Account at irs.gov/account > Tax Records > Notices and Letters. California MyFTB at ftb.ca.gov/myftb > View account balance and correspondence. Review monthly.
No outstanding or overdue filings.
Quarterly 941s, annual W-2s and 1099s, and your business income tax return all have fixed deadlines. A missed filing triggers penalties even if no tax is owing.
Check: IRS Online Account > Tax Records to confirm filed returns for each period.
No outstanding balance owing.
Unpaid balances accrue daily interest at the federal short-term rate plus 3%. Unpaid California balances accrue interest plus penalties.
Check: IRS Online Account > View account balance. California MyFTB > View account balance.
Quarterly estimated tax payments are going out on schedule.
If your business owes estimated taxes, the IRS and FTB don't send reminders. Missing a payment starts accruing interest and underpayment penalties immediately.
Check: Federal due dates: April 15, June 15, September 15, January 15. California due dates: April 15, June 15, January 15. IRS Online Account > Payments. California MyFTB > Payment history.
Sales tax account balance reconciles to your CDTFA account.
If you collect California sales tax, the Sales Tax Payable balance in QBO should match what you've collected and not yet remitted.
Check: CDTFA online account at cdtfa.ca.gov. Compare to QBO Balance Sheet > Sales Tax Payable.
FAQ
How long does this take?
For well-maintained books, 20–30 minutes. If issues surface — stale AR, Opening Balance Equity, unreviewed transactions — it takes longer, but catching them monthly is far less painful than finding them at year-end.
What if I find something wrong?
Note it and send it to your NCO bookkeeper with as much context as you have. Don't try to fix entries yourself unless you're confident — most bookkeeping errors are easier to fix correctly when your bookkeeper has the full picture.
Do I need to run every check every month?
The bank feed, reconciliation, and IRS/FTB checks should be monthly. The balance sheet checks (Opening Balance Equity, negatives, inflated accounts) can be monthly or quarterly depending on how active your books are.