We get it. Accounting and bookkeeping are complicated.
Small business owners come to us all the time with questions like:
Your time running a business isn’t best spent reconciling transactions or cleaning up balance sheets. You simply don’t have the time to focus your energy on accounting, and maybe because of it, your financial records have gotten a little chaotic and messy.
It happens. But should it KEEP happening? No. Unchecked messes can devastate a small business. Having impeccably clean books is everything.
For your business to survive and thrive, you MUST have clean account records and books. You should be able to access your business finances at the drop of a hat if need be.
Let’s take a look at some things you can do to clean up your chaotic bookkeeping.
Table of contents:
- Are your personal and business accounts separate?
- My software receives transactions from my bank feed; why are none of them reconciled?
- How do I clean up old transactions in my accounting software?
- Is the balance sheet you manually keep track of missing entries?
Are your personal and business accounts separate?
As mentioned in our previous blog, entrepreneurs shouldn’t blend their personal and business accounts.
Every small business needs to have its own business account, period. Several banks offer low to no-fee, interest-earning accounts for small businesses, and almost all of these accounts have ATM accessibility and online/mobile banking tools.
“It will save you lots of headaches down the road if you keep your business and personal banking transactions in separate accounts. You should run all business transactions through a business bank account or credit card. Personal expenses should be kept separate.” — Sarah Sinicki, Director of Business Development, Team 80 Small Business Accounting and Bookkeeping
My software receives transactions from my bank feed; why are none of them reconciled?
You understand the importance of reconciliations. You know that when you don’t conduct regular bank reconciliations, you lose insight into how well your business is doing. You integrated your bank feed with your accounting software for this reason.
Unfortunately, that isn’t the case.
Importing transactions is only part of the process. No accounting software will do all the work for you. You still need to review, enter, and code each transaction into the correct general ledger account every time.
Compare transactions in your software with the same ones on your bank statements. Once you have reviewed everything, the difference between the ending balance in your accounting system and your bank statement should be $0.00.
How do I clean up old transactions in my accounting software?
Keeping your financial records clean is crucial for financial health visibility.
Purging old transactions by either deleting or voiding them out is a perfect way to unclutter and refine your reporting accuracy.
“If you are going to clean these transactions yourself, you need to make sure all transactions from your bank and credit cards are entered and coded in your accounting system correctly. The bank balance on your statement should tie to your books each month. If not, you will need to investigate and find out where the discrepancy is coming from.” — Sarah Sinicki
Is the balance sheet you manually keep track of missing entries?
You’re busy running your business. And you might forget to track an expense.
Errors happen – it’s human nature. But, when transactions fall through the cracks they can be hard to detect later. If you use an accounting spreadsheet, the best thing you could do is set it up as a check register, where you can enter each transaction and ensure it mirrors the bank statement like you would with your personal bank account.
As a quick fix, this method will suffice. In the long run, it won’t serve you well. For your business to grow, you need to invest in an accounting package and maybe consider hiring accounting professionals for help.
There is a lot at stake. If you make a mistake, you could be setting yourself up for incorrect tax filings or penalties.
If you don’t have the time, and you know you’re out of your element, it’s time to outsource your accounting to a trusted team.
We would love to bear your accounting burden! Get in touch with us today!