quickbooks-month-end-close

name	quickbooks-month-end-close
description	Use when the user mentions closing the books, month-end, month end close, monthly close, MEC, reconciling QuickBooks, finalizing financials, closing QBO, or asks "what do I need to do to close last month" / "help me close November" / "QuickBooks balance doesn't match the bank". Also triggers on bookkeeping cleanup, finding missing transactions, or reviewing P&L before month close.

QuickBooks Month-End Close

Overview

Month-end close is the disciplined process of finalizing a period's books so financial statements reflect reality. Skipping steps creates compounding errors that take 3-5x longer to fix later. This skill walks the user through GAAP-aware close in QuickBooks Online (QBO) or Desktop, catches the 12 most common close errors, and produces a clean close memo.

Core principle: The bank statement is the truth. Everything in QuickBooks must reconcile to it. When it doesn't, find the why — don't paper over it with a journal entry.

Workflow

Phase 1: Pre-close sanity check (10 min)

Before the user does anything, ask for these 3 numbers from QBO as of the last day of the closing month:

1. Cash balance in each bank/credit account
2. AR aging total (Customers → Accounts Receivable)
3. AP aging total (Vendors → Accounts Payable)

Then ask: "What's the bank statement balance for that same date?"

If cash in QBO ≠ bank statement → there's a reconciliation gap. Note it; don't fix it yet.

Phase 2: The 9-step close

Run these in order. Order matters — bank rec before journal entries before close-the-period.

1. Bank & credit card reconciliation — every account, every line. Use QBO Reconcile tool. End balance must match statement exactly.
2. Clear "Uncategorized" transactions — search Uncategorized Income, Uncategorized Expense, Ask My Accountant. Each one needs a real category.
3. Match deposits to invoices — undeposited funds should be empty or near-empty.
4. Review AR aging — flag invoices >60 days. Decide: collect, write off, or escalate.
5. Review AP aging — confirm all bills are entered. Check for duplicates (same vendor, same amount, different dates).
6. Accruals & deferrals — prepaid expenses, deferred revenue, unbilled receivables. Often missed.
7. Payroll reconciliation — gross wages, employer taxes, benefit deductions. Match to payroll provider report.
8. Inventory adjustment (if applicable) — physical count vs. QBO count.
9. Run reports: P&L, Balance Sheet, Cash Flow. Compare to prior month — investigate any line item that moved >20%.

Phase 3: Close memo (Claude's deliverable)

After the user confirms steps 1-9, produce a one-page close memo. See references/close-memo-template.md for the exact format.

Phase 4: Lock the period

In QBO: Settings → Advanced → Accounting → Close the books. Set the close date and a password. This prevents accidental backdated changes.

Critical checks (the 12 things that break close)

When you spot any of these, stop and investigate before continuing:

1. Negative bank balance in QBO but not in real bank → uncleared deposit, duplicate payment, or bank feed gap
2. Opening balance changed since last close → someone edited a prior-period transaction. Find who and what (Audit Log → filter by date)
3. Owner's draw posted to Expenses → reclassify to Equity
4. Sales tax payable doesn't match next-period payment → likely a sales tax misposting
5. AR aging total ≠ Balance Sheet AR → custom invoice with non-AR account
6. Loan principal in Interest Expense → split out principal vs. interest
7. Credit card balance doesn't tie to statement → personal expenses on business card, or vice versa
8. Inventory asset moves with no COGS entry → write-off without proper journal
9. Payroll liability stays on books past pay date → reconciliation issue with payroll service
10. Sudden margin shift >5% → category miscoding (e.g., shipping in COGS vs. Operating)
11. Distributions ≠ K-1 distributions for partnerships → tax-time landmine
12. Foreign currency revaluation missing → if any multi-currency transactions

For each, see references/common-issues.md for the exact fix.

What you (Claude) ask the user

Lead with what the user wants the books for: tax filing, investor reporting, internal review, sale prep. The close depth differs:

• Tax filing → must close all 12 months, accrual basis if required
• Investor reporting → emphasize margin trends, burn rate, runway
• Internal review only → cash basis often fine, less detail OK
• Sale prep / due diligence → full accrual, multi-year, every account reconciled

Red flags — escalate to CPA

Don't try to fix these yourself. Tell the user to call their CPA:

• Restated prior period results
• Suspected fraud or embezzlement
• Bank balance discrepancies >$1,000 with no clear cause
• Multi-state sales tax compliance issues
• Anything involving stock options, equity compensation, or convertible notes

Quick reference

Symptom	First place to check
Cash doesn't match	Bank Feed → uncleared transactions
P&L looks wrong	Profit & Loss Detail → drill into the line
Balance sheet doesn't balance	Audit Log → who edited the opening balance
AR/AP totals wrong	Aging Detail report vs. account balance
New account appeared	Chart of Accounts → "Show inactive"

Output format for close memo

See references/close-memo-template.md.