A financial health checklist for your small business

You do not need an accounting degree to know whether your business finances are healthy. You need honest answers to twenty short questions. Go through the list below, answer yes or no, and pay attention to the noes. Most businesses have a few; the point is to see them in one place. The printable version lives on the financial health checklist page, where you can tick items off and save the list as a PDF.

Bank and records

• The business has its own bank account, and personal spending never goes through it.
• Every business purchase is paid from the business account or the business card, not reimbursed later from memory.
• Bank and card statements for every month of this year are on file, downloaded or in a folder you can find.
• The bookkeeping file (QuickBooks or whatever you use) matches the bank balance, to the cent, as of the last closed month.

Income and invoices

• You know, without looking it up, roughly what you sold last month.
• Every sale is invoiced or recorded the day it happens, including cash and card payments taken on the spot.
• You know which customers owe you money right now and how old each balance is.

Expenses and bills

• You know your three largest monthly costs and what each one was last month.
• Recurring bills (rent, software, insurance, loan payments) are listed somewhere with their due dates.
• Receipts for purchases are kept, as photos or files, in one place a bookkeeper could find.

Taxes

• Last year's business and personal returns were filed on time, and you have copies.
• If you make estimated tax payments, you know the next due date and roughly the amount.
• If you collect sales tax, the money you collected is set aside and not mixed into spending money.
• You know how your business is taxed: sole proprietor, partnership, LLC default, or S corporation.

Payroll, if you have employees

• Every person who works for you is correctly classed as an employee or a contractor, and you could explain why.
• Payroll taxes are deposited and the quarterly and annual filings go out on time.
• Each employee's pay rate, start date and withholding form are on file.

Reports and decisions

• You see a profit and loss report for each month within a few weeks of the month ending.
• You know the difference between last month's profit and the cash you can actually spend.
• When you decide on a price, a hire or a purchase, you look at a number first, not only at your gut.

What to do with your answers

Count the noes. Zero to three means the basics are in place and the work is keeping them that way. Four to eight usually means one area is weak, most often the bank and records group, and fixing that one area makes everything else easier. More than eight is common for a business that grew faster than its paperwork, and it is where catch-up bookkeeping earns its keep.

Whatever the count, start with the bank and records group. A separate account and a reconciled bookkeeping file are the foundation the other sixteen questions sit on. Then look at taxes, because missed deadlines cost real money. Reports come last, not because they matter least, but because they only mean something once the records behind them are right.

If you would rather talk the list through, that is what we do. Tell us about your business on the contact page, in English or Spanish, and we will say honestly where to start.

Start a conversationor write to us on WhatsApp

Written by the team at Choice Business Advisors, a bookkeeping, tax, and advisory firm based in Utah serving small businesses across the United States in English and Spanish.