Quarterly Close Checklist for Arizona Small Businesses: What to Reconcile Before You Hand Anything to Your CPA

Quarter-end can come up fast. Between serving customers, managing employees and keeping up with daily operations, bookkeeping tasks can easily fall behind. But if you want clean financials and fewer surprises at tax time, your first quarter close matters.

Before you hand anything to your CPA, take time to reconcile, review and clean up key accounts. A solid quarter close gives you accurate numbers, helps you spot issues early and makes the rest of the year smoother.

Reconcile All Bank Accounts

Start with your business checking and savings accounts. Every transaction in your accounting software should match your bank statements exactly.

That means:

• No missing deposits
• No duplicated expenses
• No unexplained transfers
• No lingering unreconciled items

Look closely at:

• Outstanding checks that have not cleared
• Deposits in transit
• Automatic withdrawals or subscriptions

If something does not match, fix it now. Small discrepancies in early in the year can turn into major confusion by year's end. Clean reconciliations ensure your cash balance is accurate, which is critical for budgeting and forecasting.

Reconcile Credit Card Accounts

Credit card errors are one of the most common bookkeeping issues for small businesses. Review each business credit card statement and confirm:

• Every charge is recorded
• Charges are categorized correctly
• Personal expenses are not mixed in
• Interest and fees are properly accounted for

If owners occasionally use a business card for personal expenses, those should be recorded clearly as owner draws, not business expenses.

Accurate credit card reconciliations protect you in case of an audit and ensure your expense reports reflect reality.

Review Accounts Receivable Aging

Your A/R aging report shows who owes you money and how long invoices have been outstanding. Before sending records to your CPA:

• Review invoices over 30, 60 and 90 days
• Follow up on overdue accounts
• Write off uncollectible balances if necessary
• Confirm customer payments were applied correctly

Old unpaid invoices inflate your income on paper while hurting your cash flow in real life. Cleaning up A/R gives you a more realistic financial picture and improves collections going forward.

Verify Payroll Reports

Payroll errors can create tax headaches quickly. Pull your quarterly payroll reports and confirm:

• Gross wages match your payroll system
• Payroll taxes were withheld correctly
• Employer tax payments were submitted
• Contractor payments were properly classified

Make sure your W-2 employees and 1099 contractors are correctly categorized. Misclassification can lead to penalties and back taxes.

If you use a payroll provider, compare their reports to your accounting software to make sure everything is syncing correctly.

Clean payroll records make your CPA’s job easier and reduce the risk of compliance issues.

Review Merchant Processing Fees

If your business accepts credit cards, you are paying merchant processing fees. Many business owners record deposits but forget to account for the processing fees that are deducted before funds hit their bank account.

Check:

• That gross sales match your POS reports
• That processing fees are recorded as expenses
• That net deposits reconcile with your bank statements

If fees are not recorded properly, your revenue and expense totals will be inaccurate. Over time, that distorts profitability.

Confirm Owner Draws and Contributions

For S corporations, LLCs and sole proprietors, owner draws often get miscoded. Review your books and confirm:

• Personal withdrawals are recorded as owner draws, not expenses
• Capital contributions are properly categorized
• Distributions align with your tax strategy

Incorrectly labeling owner draws as business expenses can distort profit and trigger issues during tax preparation.

Clean separation between personal and business finances is essential, especially in Arizona, where many small businesses are family-owned and closely held.

Check TPT Payable

Arizona businesses must also stay on top of Transaction Privilege Tax reporting. Before closing a quarter:

• Reconcile taxable gross receipts by business classification
• Confirm TPT filings and payments were submitted
• Verify your TPT liability account reflects amounts owed versus amounts remitted

TPT errors can lead to notices, penalties, and interest. Make sure your records clearly tie reported revenue to payments made.

Review Profit and Loss and Balance Sheet

After completing reconciliations, run your quarterly Profit and Loss statement and Balance Sheet. Look for:

• Negative account balances that do not make sense
• Large unexplained expense spikes
• Revenue inconsistencies
• Uncategorized transactions

Your financial reports should tell a clear story. If they look messy, your CPA will spend more time cleaning them up, which can increase fees and delay tax strategy conversations.

Why a Clean Quarterly Close Matters

A thorough quarterly close does more than prepare you for tax season. It helps you:

• Make informed decisions
• Catch problems early
• Improve cash flow
• Plan for growth

Need Help Getting Your Books Ready for the End of a Quarter?

The team at H&H Accounting Services works with small businesses across the Valley to clean up books, reconcile accounts and prepare accurate financials. Whether you need quarterly bookkeeping support or a full financial review from a CPA, professional guidance can save you time and money.

Give us a call at (480) 561-5805 to make sure your quarterly close is accurate, organized and ready for whatever comes next.