How often should a business conduct a trial balance?

Conducting a trial balance monthly or at the end of each accounting period is a best practice for businesses because it helps ensure that the general ledger is accurate and that all accounting entries are properly recorded. By regularly checking the trial balance, businesses can identify discrepancies early, which facilitates timely corrections before finalizing their financial statements.

This practice is vital for maintaining financial accuracy throughout the year rather than waiting until the end of a fiscal year or tax season. Frequent reviews help to catch errors in data entry, transactions, or posting before they can compound into larger accounting issues. This ongoing monitoring supports better financial decision-making and provides a clearer picture of the company’s financial health.

Conducting a trial balance only once a year, every time a transaction occurs, or solely for tax preparation does not allow for maintaining the same level of accuracy and oversight throughout the accounting period. Regular assessments promote a proactive approach to financial management.