No matter the size of your business, it is unimaginable how it would properly function without a solid bookkeeping system in place. It serves a great purpose for tax preparation, succession planning and financial reports for making business growth decisions. Also gives a concrete indication of your company’s success and sustainability. But to maintain your books, keeping them accurate, timely and reliable is one of the biggest challenges. After all, you got in to business to sell a product or provide a service, not to do bookkeeping. Let’s get it in shape and keep it that way.
Correct Errors as Soon as You Find Them
If you find a discrepancy when reconciling your books, try to resolve it as soon as possible, no matter how small the discrepancy is. Don’t assume it is exactly the amount showing as the amount of the difference. It could be a combination of debits and credits, that make up the error. Find the source and correct it immediately. I rarely allow a ‘reconciliation adjustment’ to be entered. I never recommend allowing the error to rollover into the next month. This can become a snarled mess very quickly.
Review the Transactions Daily or Bi-Weekly
One of my recommendations to avoid the situation discussed above, would be to balance your account weekly or at minimum bi-monthly. This will allow the issue to reside in current details and much easier to locate and correct. Matching up deposits with the bank and confirming your customers payments are recorded accurately should also be on a frequent schedule. Implementing procedures throughout the month will ensure smoother and timelier month-end processes.
Schedule Bookkeeping Time
Business owners are busy running the business, so bookkeeping falls down the list. Often, this results in delayed categorization of transactions. Delaying too long, may result in forgotten details. The steps that then need to be taken can require receipts to be gathered, or locating the correct person who knows the answer, all postponing the process. Then the bookkeeping gets delayed even further. This can become a vicious cycle, unnecessarily prolonging and complicating the bookkeeping process. Rather than doing the bookkeeping when you get around to it, or leaving it in pending status, schedule time frequently. Hold that time as important as an appointment with an A client. It is that important to keep your bookkeeping updated and accurate.
This second in the blog series, helps you to develop procedures to keep your bookkeeping accurate and timely. Use the schedule system that works for you and make your bookkeeping a priority. If you follow my series, and implement these changes, you will soon be in tip top shape, ready for changes, growth and more. You will be better prepared for a tax planning session in the 4th quarter, helping you to make the most tax advantageous decisions for your business. See you next month!