ChatGPT Prompts for Accounting & Bookkeeping

Categorize the following list of business expenses into standard accounting categories for my business.

Business type: [e.g., marketing agency, restaurant, freelance consulting]
Accounting method: [cash basis / accrual basis]
Fiscal year: [e.g., calendar year / April-March]

Here are the expenses to categorize:
[Paste your list of expenses — include date, vendor/payee, amount, and any description you have]

For each expense, provide:

1. **Category assignment**: Map each expense to a standard chart of accounts category (e.g., Office Supplies, Professional Services, Travel & Entertainment, Utilities, Insurance, Advertising & Marketing, Meals, Software & Subscriptions)

2. **Tax deductibility flag**: Mark each expense as fully deductible, partially deductible (with the percentage and reason), or non-deductible. Note any expenses that require additional documentation to claim.

3. **Questionable items**: Flag any expenses that could fall into multiple categories and explain which category is more advantageous from a tax perspective and why.

4. **Missing information**: Identify any expenses that need additional detail (e.g., meal receipts that need attendee names and business purpose documented).

5. **Summary table**: Create a summary grouped by category showing total spend per category, percentage of total expenses, and any categories that seem unusually high or low for my business type.

6. **IRS red flag check**: Highlight any expense patterns that might trigger additional scrutiny during an audit and suggest how to document them properly.

Generate a monthly financial summary report based on the following data for my business.

Business name: [your business name]
Industry: [e.g., SaaS, retail, professional services]
Month and year: [e.g., February 2026]
Revenue this month: [total revenue]
Revenue last month: [for comparison]
Revenue same month last year: [for YoY comparison, if available]
Total expenses this month: [total expenses]
Major expense categories and amounts:
- [Category 1]: [amount]
- [Category 2]: [amount]
- [Category 3]: [amount]
[Add more as needed]
Accounts receivable balance: [outstanding invoices total]
Accounts payable balance: [unpaid bills total]
Cash in bank: [current balance]

Create a professional monthly financial summary that includes:

1. **Executive snapshot** (3-4 sentences): Plain-English overview of the month's financial health — is the business trending up, flat, or down? What's the one number the owner should focus on?

2. **Income statement summary**: Revenue, COGS (if applicable), gross profit, operating expenses by category, net profit, and profit margin percentage. Compare to prior month and prior year.

3. **Cash flow highlights**: Cash inflows vs. outflows, net change in cash position, and days of operating runway at current burn rate.

4. **Key ratios**: Calculate and explain current ratio, quick ratio, gross margin, net margin, and expense ratio. Flag any ratio that's outside healthy range for my industry.

5. **Accounts receivable aging**: Based on the AR balance, suggest an aging breakdown framework (current, 30-day, 60-day, 90+ day) and recommend follow-up actions for each bucket.

6. **Red flags and opportunities**: 3 specific observations — patterns in spending, revenue concentration risks, or cost-saving opportunities based on the data.

7. **Next month outlook**: Based on trends, project next month's revenue and expenses. List 2-3 financial priorities for the upcoming month.

Format this as a report I could hand directly to a business partner, banker, or advisor.

Create a professional invoice template and generate a sample invoice for my business.

Business name: [your business name]
Business address: [full address]
Business phone/email: [contact info]
Tax ID / EIN: [if applicable — use placeholder if you prefer]
Industry: [e.g., consulting, construction, design]
Billing structure: [hourly / project-based / retainer / product sales]
Payment terms: [e.g., Net 15, Net 30, due on receipt]
Accepted payment methods: [e.g., bank transfer, check, credit card, PayPal]
Late fee policy: [e.g., 1.5% per month after 30 days]

Generate:

1. **Invoice template structure**: A complete layout with all required fields:
   - Invoice number format recommendation (and numbering convention)
   - Date issued and due date
   - Bill-to section with client details
   - Line items table (description, quantity, unit price, amount)
   - Subtotal, tax line (with rate), and total due
   - Payment instructions section
   - Terms and conditions footer

2. **Sample completed invoice**: Fill in a realistic example for my business type with 4-5 line items that reflect typical work.

3. **Professional notes section**: Write 3 versions of a thank-you/payment reminder note — one friendly, one neutral, one for repeat overdue clients.

4. **Legal compliance checklist**: List the required elements for a legally valid invoice in the US (and note any state-specific requirements I should verify).

5. **Numbering system**: Recommend an invoice numbering scheme that scales and makes accounting easier (e.g., YEAR-CLIENT-SEQUENCE).

6. **Email templates**: Write the subject line and body text for the email that accompanies the invoice — one for new clients and one for recurring clients.

Create a comprehensive tax deduction checklist tailored to my business.

Business type: [e.g., sole proprietor, LLC, S-Corp]
Industry: [e.g., real estate agent, freelance writer, restaurant owner]
Home office: [yes/no — if yes, square footage of office and total home]
Vehicle use: [personal vehicle used for business? estimated business miles per year]
Number of employees: [including yourself]
Estimated annual revenue: [range is fine]
State: [your state for state-specific deductions]

Build a detailed tax deduction checklist organized by category:

1. **Operating expenses**: List every common deductible expense for my business type — be specific, not generic. Include items most business owners in my industry miss.

2. **Home office deduction**: Calculate both the simplified method ($5/sq ft up to 300 sq ft) and the regular method based on my details. Recommend which to use and why.

3. **Vehicle deduction**: Compare standard mileage rate vs. actual expense method with example calculations. Explain the mileage log requirements.

4. **Employee-related deductions**: Wages, benefits, retirement contributions, training costs — with limits and phase-out thresholds where applicable.

5. **Startup costs**: If applicable, detail the first-year deduction limits vs. amortization rules for business startup expenses.

6. **Often-missed deductions**: List 10 commonly overlooked deductions specific to my industry, with the documentation needed to claim each one.

7. **Retirement contributions**: Compare SEP-IRA, SIMPLE IRA, and Solo 401(k) contribution limits for my business structure. Calculate the maximum I could contribute based on my revenue.

8. **Documentation requirements**: For each major category, specify what records the IRS requires — receipt thresholds, log formats, and retention periods.

9. **Quarterly estimated tax dates**: List all four quarterly payment deadlines and a formula for calculating each payment based on my projected income.

Disclaimer: Flag that this is a starting point and should be reviewed by a CPA for my specific situation.

Write a series of professional accounts receivable follow-up emails for collecting overdue invoices from my clients.

Business type: [e.g., accounting firm, marketing agency, contractor]
Typical invoice range: [e.g., $1,500 - $10,000]
Client relationship: [ongoing retainer / project-based / one-time]
Payment terms in contract: [e.g., Net 30]
Current situation: [e.g., invoice is 15 days overdue, client has been unresponsive]
Tone: [professional and warm / firm but fair / strictly business]

Write 4 escalating collection emails:

**Email 1 — Gentle reminder (7 days past due)**:
Subject line + full email body. Frame it as a friendly check-in. Assume the invoice may have been overlooked. Include invoice number, amount, original due date, and a direct link or instructions for payment. Close with an offer to answer questions about the invoice.

**Email 2 — Firm follow-up (21 days past due)**:
Subject line + full email body. Reference the previous email. Restate the overdue amount and the number of days past due. Mention any late fee provisions from your contract. Offer to set up a brief call to discuss any billing concerns. Request a specific reply with a payment date commitment.

**Email 3 — Escalation notice (45 days past due)**:
Subject line + full email body. State that the account is significantly past due. Outline the consequences: late fees accrued, potential service suspension, and impact on their account standing. Provide a final deadline for payment or payment plan arrangement. CC format (mention that this may be escalated internally).

**Email 4 — Final demand (60+ days past due)**:
Subject line + full email body. Formal tone. Summarize the full payment history and all previous attempts to collect. State that the next step will be referral to collections or legal counsel. Provide a 10-day final window for resolution. Include specific payment instructions.

Also provide:
- A phone call script for a polite but direct conversation about the overdue balance
- 3 preventive contract clauses that reduce AR aging in the first place
- A template for offering a payment plan when the client is willing but cash-strapped

Build a 13-week rolling cash flow forecast for my business based on the data I provide.

Business type: [e.g., e-commerce store, law firm, landscaping company]
Current cash balance: [amount in bank today]
Average weekly revenue: [your typical weekly income]
Revenue pattern: [steady / seasonal / project-based with lumpy payments]
Recurring weekly expenses: [list fixed costs — rent, payroll, subscriptions, loan payments]
Variable expenses: [list costs that change — materials, commissions, contractor payments]
Accounts receivable: [outstanding invoices — amounts and expected payment dates]
Accounts payable: [upcoming bills — amounts and due dates]
Known upcoming large expenses: [e.g., quarterly tax payment, equipment purchase, insurance renewal]
Known upcoming large inflows: [e.g., signed contracts, seasonal peak]

Create a 13-week cash flow forecast that includes:

1. **Weekly cash flow table**: For each of the 13 weeks, show:
   - Beginning cash balance
   - Cash inflows (broken down by source)
   - Cash outflows (broken down by category)
   - Net cash flow for the week
   - Ending cash balance

2. **Three scenarios**:
   - **Best case**: Revenue comes in 10% above average, all AR collected on time
   - **Base case**: Revenue at average, AR collected with typical delays
   - **Worst case**: Revenue drops 20%, one major client delays payment by 30 days

3. **Cash runway calculation**: At current burn rate, how many weeks of cash do I have? At what point does cash balance hit a danger zone?

4. **Trigger points**: Identify the specific week where cash gets tight in the worst-case scenario and list 3 actions I should take now to prepare.

5. **Recommendations**: Based on the forecast, should I be building a cash reserve, accelerating collections, negotiating extended payment terms with vendors, or securing a line of credit? Be specific with dollar amounts.

Format the table so I can recreate it in a spreadsheet.

Design a chart of accounts for my business that's organized, scalable, and tax-season friendly.

Business type: [e.g., consulting firm, retail shop, SaaS company, restaurant]
Business structure: [sole proprietor / LLC / S-Corp / C-Corp]
Current accounting software: [QuickBooks Online / Xero / FreshBooks / Wave / spreadsheet]
Number of revenue streams: [describe each — e.g., consulting fees, product sales, training workshops]
Number of departments or cost centers: [if any]
Do you track projects separately: [yes/no]
Any industry-specific accounts needed: [e.g., COGS for food, client trust accounts for law firms]

Build a complete chart of accounts with:

1. **Account numbering system**: Use a standard numbering convention:
   - 1000-1999: Assets
   - 2000-2999: Liabilities
   - 3000-3999: Equity
   - 4000-4999: Revenue
   - 5000-5999: Cost of Goods Sold
   - 6000-6999: Operating Expenses
   - 7000-7999: Other Income/Expenses
   Leave gaps between numbers for future accounts.

2. **Account list**: For each account, provide:
   - Account number
   - Account name
   - Account type (asset, liability, equity, revenue, expense)
   - Normal balance (debit or credit)
   - Description of what goes here (one sentence)
   - Tax line mapping (which line of the tax return this feeds into)

3. **Industry-specific accounts**: Include accounts specific to my business type that a generic template would miss.

4. **Sub-accounts**: Where parent-child relationships make sense for more granular tracking without cluttering the main list.

5. **Accounts to avoid**: List 5 common chart of accounts mistakes for my business type — overly detailed breakdowns that create confusion or categories that should be merged.

6. **Software setup instructions**: Step-by-step guidance for importing or creating this chart in my specific accounting software.

7. **Review schedule**: Recommend how often to review and clean up the chart of accounts as the business grows.

Walk me through a complete bank reconciliation process and help me identify and resolve discrepancies.

Business type: [e.g., retail, consulting, e-commerce]
Accounting software: [QuickBooks Online / Xero / FreshBooks / spreadsheet]
Bank account type: [checking / savings / credit card]
Reconciliation period: [e.g., January 2026]
Bank statement ending balance: [amount per bank statement]
Book balance (per your accounting records): [amount in your software]
Difference: [the amount that doesn't match]
Known outstanding items:
- Outstanding checks: [list check numbers and amounts not yet cleared]
- Deposits in transit: [amounts deposited but not yet on the statement]
- Recurring auto-payments: [any that might not be recorded in your books]

Guide me through reconciliation:

1. **Step-by-step process**: Walk through the reconciliation procedure in order — starting with the bank statement balance and adjusting to match the book balance. Explain each adjustment type clearly.

2. **Common discrepancy causes**: List the 10 most common reasons bank and book balances don't match, ranked by how frequently each occurs. For each cause, explain how to find it and fix it.

3. **Duplicate transaction check**: Provide a method for identifying duplicate entries — what to look for when the same transaction appears twice in different forms (e.g., manual entry plus bank feed import).

4. **Unrecorded transactions**: Help me identify types of transactions that commonly go unrecorded — bank fees, interest income, automatic payments, returned checks, merchant processing fees.

5. **Adjustment journal entries**: For each type of discrepancy, write the exact journal entry needed to correct the books (account, debit, credit, memo).

6. **Reconciliation checklist**: A printable month-end checklist I can follow every time, including who should review and sign off.

7. **Prevention plan**: 5 specific habits to adopt so next month's reconciliation takes 15 minutes instead of 2 hours.

8. **Red flags**: What patterns in reconciliation discrepancies might indicate fraud or internal control weaknesses?

Create a comprehensive year-end closing checklist for my business to ensure accurate financials and smooth tax preparation.

Business type: [e.g., LLC, S-Corp, sole proprietor]
Industry: [your industry]
Fiscal year end: [e.g., December 31]
Number of employees: [count]
Accounting software: [QuickBooks / Xero / other]
Revenue range: [approximate annual revenue]
Do you have inventory: [yes/no]
Do you have fixed assets / equipment: [yes/no]
External accountant/CPA: [yes/no]

Build a detailed year-end closing checklist organized by phase:

**Phase 1 — Pre-Close (2 weeks before year end)**:
- Bank reconciliation for all accounts through the last day of the year
- Credit card statement reconciliation
- Accounts receivable review — list specific tasks for aging analysis and write-off decisions
- Accounts payable review — identify accrued expenses and prepaid items
- Payroll verification — ensure all payroll runs are complete and recorded

**Phase 2 — Adjusting Entries (first week of January)**:
- Depreciation entries for all fixed assets (list methods and common useful lives)
- Inventory adjustments (if applicable) — physical count reconciliation steps
- Prepaid expense amortization
- Accrued revenue and expenses
- Bad debt allowance review
- Owner's draw/distribution reconciliation

**Phase 3 — Review and Verify (second week of January)**:
- Trial balance review — what to look for
- Revenue recognition verification
- Expense categorization audit — reclassify any miscategorized items
- Intercompany transactions (if applicable)
- Loan balance verification against lender statements
- Sales tax reconciliation

**Phase 4 — Tax Preparation (January-February)**:
- 1099 preparation and filing deadlines
- W-2 verification
- Estimated tax payment reconciliation
- Documentation package for CPA — list every document to gather
- Entity-specific tax form deadlines (Schedule C, 1120-S, 1065, etc.)

**Phase 5 — Post-Close**:
- Lock prior year in accounting software
- Set up new year — new budgets, updated chart of accounts
- Financial statement preparation — balance sheet, income statement, cash flow statement

For each task, include the deadline, who's responsible (owner vs. bookkeeper vs. CPA), and estimated time to complete.

Write a professional engagement letter for my accounting or bookkeeping practice to send to new clients.

Firm name: [your firm name]
Services offered: [e.g., monthly bookkeeping, tax preparation, payroll, advisory]
Service being engaged: [specific service this letter covers]
Billing structure: [hourly rate / fixed monthly fee / per-project fee]
Fee amount: [your rate or fee]
Estimated scope: [e.g., monthly bookkeeping for a business with ~200 transactions/month]
Client's business type: [e.g., small e-commerce company, medical practice]
Engagement start date: [date]
Term: [month-to-month / annual / per-project]

Write a complete engagement letter that includes:

1. **Scope of services**: Detailed description of exactly what's included and — critically — what's not included. Be specific enough to prevent scope creep. List each deliverable with frequency (e.g., "monthly bank reconciliation for up to 3 accounts").

2. **Client responsibilities**: What the client must provide, by when, and in what format. Include deadlines for document submission, access credentials, and responsiveness expectations.

3. **Fees and billing**: Payment amount, frequency, due date, accepted methods, and late payment consequences. Include a clause for out-of-scope work (hourly rate for additional requests).

4. **Timeline and deadlines**: Key dates for deliverables, turnaround times, and tax filing deadlines relevant to the engagement.

5. **Communication protocol**: How and when you'll communicate — monthly check-in calls, email response times, portal access for document sharing.

6. **Confidentiality clause**: Standard confidentiality language appropriate for accounting engagements. Reference that you'll handle their financial data with professional care.

7. **Limitation of liability**: Standard language limiting your liability — note that this should be reviewed by an attorney for your jurisdiction.

8. **Termination clause**: How either party can end the engagement — notice period, final billing, return of documents and data.

9. **Signature block**: Space for both parties to sign with date, printed name, and title.

Keep the tone professional but accessible — this should build trust, not intimidate the client with legalese.

Analyze the profit margins for my business and identify specific opportunities to improve profitability.

Business type: [e.g., e-commerce, consulting, restaurant, SaaS]
Annual revenue: [total revenue]
Revenue breakdown by product/service line:
- [Product/Service A]: [revenue] — [direct cost to deliver]
- [Product/Service B]: [revenue] — [direct cost to deliver]
- [Product/Service C]: [revenue] — [direct cost to deliver]
[Add more lines as needed]
Total fixed overhead: [rent, salaries, insurance, subscriptions, etc.]
Variable costs: [materials, commissions, shipping, merchant fees, etc.]
Industry: [your industry for benchmarking]
Current pricing model: [how you charge — hourly, per unit, subscription, etc.]

Perform a detailed profit margin analysis:

1. **Gross margin by product/service line**: Calculate gross margin percentage for each offering. Rank them from most to least profitable. Identify any products/services operating at or below breakeven.

2. **Contribution margin analysis**: For each product line, calculate the contribution margin (revenue minus variable costs). Determine which products contribute the most to covering fixed overhead.

3. **Operating margin**: Calculate the overall operating margin after all expenses. Compare to industry benchmarks and flag if I'm above, at, or below average.

4. **Break-even analysis**: Calculate my break-even point in both revenue dollars and units/clients. How far above or below break-even am I currently operating?

5. **Margin improvement opportunities**: Provide 5 specific, actionable recommendations:
   - 2 revenue-side improvements (pricing, upselling, mix optimization)
   - 2 cost-side improvements (vendor negotiation, process efficiency, elimination of low-margin offerings)
   - 1 structural change (business model adjustment, automation, outsourcing)
   For each recommendation, estimate the potential margin impact in dollars and percentage points.

6. **Pricing sensitivity**: If I raise prices by 5%, 10%, or 15%, model the impact on margin assuming a [X]% customer loss at each tier. At what price increase does total profit actually decrease?

7. **Monthly tracking dashboard**: Design a simple 5-metric dashboard I should review monthly to monitor margin health.

Include formulas for each calculation so I can update the analysis with new numbers each quarter.

Create a budget vs. actuals variance report for my business and help me interpret the results.

Business name: [your business name]
Reporting period: [e.g., Q1 2026 or January 2026]
Industry: [your industry]

Budgeted figures for the period:
- Revenue: [budgeted amount]
- Cost of Goods Sold: [budgeted amount]
- Payroll: [budgeted amount]
- Rent/Occupancy: [budgeted amount]
- Marketing/Advertising: [budgeted amount]
- Software/Technology: [budgeted amount]
- Professional Services: [budgeted amount]
- Travel/Entertainment: [budgeted amount]
- Utilities: [budgeted amount]
- Insurance: [budgeted amount]
- Other expenses: [list any significant categories and budgeted amounts]

Actual figures for the same period:
[Provide the same categories with actual numbers]

Generate a comprehensive variance report:

1. **Variance table**: For each line item, show:
   - Budgeted amount
   - Actual amount
   - Dollar variance (favorable or unfavorable)
   - Percentage variance
   - Flag any variance over 10% for investigation

2. **Variance classification**: Categorize each significant variance as:
   - **Volume variance**: Change due to more/fewer units sold or produced
   - **Price variance**: Change due to cost per unit increasing or decreasing
   - **Timing variance**: Expense shifted between periods but total remains on track
   - **Permanent variance**: True over/under-spend requiring budget adjustment

3. **Root cause analysis**: For the 3 largest unfavorable variances, provide:
   - Likely causes (list 2-3 possibilities for each)
   - Questions to investigate further
   - Whether this is likely a one-time event or recurring trend

4. **Favorable variance review**: Don't ignore good news — for the top 2 favorable variances, assess whether they represent genuine savings or deferred spending that will hit next period.

5. **Impact on annual forecast**: Based on this period's performance, should I revise my full-year budget? Provide an updated annual projection if trends continue.

6. **Action items**: List 5 specific actions ranked by financial impact:
   - What to do about each major unfavorable variance
   - How to sustain favorable variances
   - Budget line items to adjust for next period

7. **Presentation summary**: Write a 3-sentence executive summary I can share with partners, investors, or my advisory board.