A monthly bookkeeping routine has four parts: record every transaction, reconcile each bank and card account to its statement, chase what is owed and what is missing, then review the numbers and close the month. For most sole traders and small businesses this takes one to two hours a month if done within a week of month end. Under Making Tax Digital it also means each quarterly update is a summary of work already done, not a catch-up exercise.
1. Record
- Upload receipts and supplier bills from the month, including email receipts.
- Record all sales and other business income.
- Categorise every bank feed transaction. Leave nothing in "uncategorised".
- Mark personal spending on business accounts so it stays out of your expenses.
- Record cash income and expenses that never touched the bank.
2. Reconcile
- Reconcile each business bank account so your software matches the statement balance at month end.
- Reconcile each business credit card and any payment accounts such as PayPal, Stripe or SumUp.
- Look into duplicates, transfers between your own accounts and anything you don't recognise.
3. Chase
- Review unpaid sales invoices and send reminders for anything overdue.
- Check upcoming supplier payments and direct debits for the next month.
- List missing receipts and get copies while they are still easy to find.
4. Review and close
- Compare this month's income and main costs with last month and the same month last year.
- Check your bank balance against the next 30 days of known payments.
- Note one-off items that matter at year end, such as equipment bought or a loan received.
- Put upcoming deadlines in your diary: VAT, payroll, MTD quarterly updates and Self Assessment payments.
Key deadlines to keep in view
- MTD for Income Tax quarterly updates: 7 August, 7 November, 7 February and 7 May (if you are in MTD).
- Self Assessment tax return: 31 January after the tax year ends.
- VAT returns and payroll submissions: on the dates set for your business.
How long to keep records
Sole traders must keep records for at least 5 years after the 31 January submission deadline for the tax year. For the 2025 to 2026 tax year, filed by 31 January 2027, that means keeping records until at least the end of January 2032. Limited companies have their own, longer rules.
Signs your monthly routine is slipping
- The bank feed has more than a month of uncategorised transactions.
- You don't know your bank balance after next week's payments.
- Customers are paying late and nobody has chased them.
- You are searching for receipts at quarter end or in January.
If two or more apply, a short catch-up first is quicker than trying to restart the monthly routine from where it stopped. See our catch-up bookkeeping guide.
Frequently asked questions
How long should monthly bookkeeping take?
For a sole trader with a few dozen transactions a month, one to two hours if done promptly. Busier businesses, VAT and payroll add time.
What is bank reconciliation?
Checking that every transaction in your bookkeeping software matches your bank statement, so the balance at month end agrees exactly. It is the main check that nothing is missing or duplicated.
Do I need to do this monthly if I'm not VAT registered?
It is not a legal requirement, but monthly is far easier than yearly, and if you are in Making Tax Digital you need quarterly totals anyway.
Can I use this checklist with Xero, QuickBooks, FreeAgent or Sage?
Yes. The steps are the same in any software. Our bookkeeping software comparison covers the differences between them.
Sources (reviewed 15 October 2026)
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