How to Review Business Transactions: A Founder’s Checklist

A bank feed tells you that money moved. It does not always tell you why, whether the amount is complete, or how the transaction should appear in your books. A useful review ties the entry to its source, its business purpose, and the account that should carry it.

This guide uses U.S. federal recordkeeping references as examples. The workflow below is an operating routine, not a ruling on whether a specific cost is deductible or how it must be reported. Keep your accountant involved when an accounting or tax treatment is unclear.

Set aside a short weekly block to clear new questions while a purchase or deposit is still familiar. At month-end, review every connected account against its statement and finish with a list of the decisions still open. The weekly block is a practical cadence; the monthly bank reconciliation is the control that checks the books against the institution’s record.

The IRS’s Publication 583 recommends reconciling a business checking account monthly. It describes comparing deposits and cleared checks, identifying items such as bank charges or outstanding checks, and updating the books for items not yet recorded.

List each account that carries business activity: checking, savings, credit cards, loans, and any payment processor that sends payouts to the bank. For the same date range, compare the source statement with the ledger. Confirm that each deposit and withdrawal appears once, for the correct amount, and in the right period.

Do not force a reconciliation by changing a number to make the balance agree. Separate timing items, such as deposits in transit or checks not yet cleared, from errors that need correction. Check bank fees, interest, refunds, returned payments, duplicate imports, and transfers between your own accounts. When a processor pays out a net amount, use its payout detail to connect sales, fees, refunds, and the bank deposit instead of treating the deposit as an unexplained sale.

The IRS describes reconciliation as a way to verify the account balance and correct errors in the statement, checkbook, and books. Its guide also recommends keeping business and personal accounts separate and identifying the source of deposits. Those habits make both the matching and later review easier.

For each expense, check the merchant or payee, transaction date, amount, business purpose, and supporting document. Attach the receipt or invoice when available; retain the related contract, order, mileage log, or approval when that is what explains the purchase. For income, identify the customer, source, and deposit or processor detail. A merchant name alone is often too vague to answer those questions six months later.

The IRS lists invoices, receipts, account statements, sales slips, and other records among the documents that can support business transactions. It also notes that proof of payment by itself does not establish that a cost qualifies for a tax deduction. For travel, gift, and car expenses, follow the specific rules inPublication 463; those categories can require more detail than an ordinary card receipt.

Write a short, factual note while the context is fresh: what was bought, which project or customer it supported, and who approved it if approval matters to your process. Keep sensitive details in the appropriate secure record rather than copying them into a general ledger memo.

Before assigning an income or expense category, ask what actually happened. A deposit could be a customer payment, a loan, owner funding, a refund, or a transfer from another account. A card payment may be a transfer that pays down a liability, not a second expense. A purchase may need review as equipment or inventory rather than a routine operating cost.

For example, match a customer receipt to the invoice or sales record; record loan proceeds as borrowing rather than sales income; and identify owner funding as a contribution rather than customer revenue. A vendor refund usually belongs with the original purchase, while money returned to a customer is tied to that sale. A transfer between your own accounts is not new income or spending, and a card payment clears the card balance instead of recording the card purchases a second time. Equipment and goods bought for resale can follow different asset and inventory policies than ordinary supplies. These are bookkeeping distinctions, not conclusions about tax treatment; follow your accounting policy and ask your accountant when the right treatment is unclear.

Keep the transaction’s date and the accounting period aligned with the method your business uses. The SBA’s overview of managing business finances explains the difference between cash and accrual timing and points founders to bookkeeping, cash flow, and bank reconciliation. If a classification changes a reporting period or treatment, write down the question and ask your accountant rather than guessing from the vendor name.

Once statements reconcile, review the remaining exceptions and look across the period for changes worth understanding: a new recurring vendor, a large month-over-month category shift, a customer payment that has not arrived, or a cost that may need a different treatment. The SBA recommends using bookkeeping and financial statements to understand a business’s finances; this review turns the ledger into a set of questions the founder can act on.

Hand your bookkeeper or accountant the reconciled statements, source documents, exception log, and a note about decisions that still need professional judgment. Agree who will resolve each open item and when it will be revisited. A clean handoff means the books show what is known and make the unknowns visible.