It’s time for your accountant to review your bookkeeping records. Step one is for him/her to check whether balance sheet accounts have been reconciled in order to feel assured that all transactions have been captured in the books for the year.
Unfortunately, many business owners do not keep these accounts reconciled on a regular basis (and some not at all).
Take time each month to reconcile bank statements to the transactions entered in your checkbook register. This simple task becomes much more burdensome when left for long periods of time. Many accounting systems, such as QuickBooks, make this reconciliation process fairly easy, especially if bank accounts are connected through bank feeds to the electronic accounting file.
Credit card accounts seem to be the most neglected of reconciled accounts. However, if they are performed on a routine schedule each time a credit card statement is received, the task becomes simplified and automated. These accounts oftentimes have many transactions through the billing cycle, so by reconciling each month, you can be certain that all receipts have been entered.
In addition to your asset accounts, liability accounts should also be considered when reconciling your balance sheet accounts. Any loan balances on your books can be reconciled on a regular basis by analyzing the monthly or quarterly statements received from your loan processing company. This monthly/quarterly reconciliation process will keep your books up to date with all payments made through the year, eliminating any chance of not recording of these transactions. Some bookkeeping adjustments may need to be entered if there is any interest being paid with these monthly payments. By keeping on top of these balances throughout the year, this process will avoid additional work to be completed by your tax preparer at year-end, resulting in savings to you on these tax preparation fees.
If you are a business owner looking for an affordable way to simplify your bookkeeping processes, you may want to consider RAD (Remote Accounting Department). RAD is a small business accounting package that offers you a secure, web-based platform to manage accounting and bookkeeping tasks.
• Hire and maintain an accounting staff for your business – remotely.
• Record your bills and help pay them monthly.
• Record your payroll.
• Balance your checkbooks & credit cards.
• Provide critical financial data including quarterly analysis.
• Perpetual backup with access 24/7.
For more information please visit: https://www.dh-cpa.com/remote-bookkeeping-the-logical-solution-for-many-small-businesses.html.
Written by Martha Leonard, Bookkeeper and Tax Preparer, Davis & Hogdon Associates CPAs