Hello, I am so glad you are here and reading this blog post. This one post, above all others, deals with what I believe to be the most important part of bookkeeping. Everything leading up to this point sets the stage for this most important step. If the systems we have already discussed are in place and being used, then this next step should be a breeze. This aspect of bookkeeping ensures that your books are in order, gives you a clear picture of the financial health of your business, and provides information about how to move your business to the next level. Performing this step can greatly impact your business in a positive way, just as not performing it can impact your business negatively. This step is all about maintenance, where a little work on a regular basis will save a lot of time and money down the road. We all know there is a financial deadline looming each year for businesses and individuals. This date is usually around April 15 and it is known as tax day. It is published in many calendars. It is on our devices, Many restaurants give away food as a reward for completing this monumental task. Imagine that by mid January you were able to contact your accountant and simply email him or give him a thumb drive containing all of your financial records from the previous year. Imagine a time of tranquility during the first quarter. One where you can continue to focus on your business. Where you do not need to spend your valuable time hunting financial documents, bank and credit card statements, etc. only to send them to your accountant and pay a pretty penny for him to sort through them to find the information needed to file your tax return.
There is a way and it doesn't have to be time consuming or overwhelming. Consistency is key to this step. Ok, I have given lots of positives and built this thing up so here it is. Reconcile your accounts each month. That’s it. Make sure your statements are recorded, categorized, and the amounts from the bank match the amounts you have recorded. The way you reconcile and the amount of time it takes depends on the systems you have set up for bookkeeping. A pen and paper system is more tedious than bookkeeping software, but nonetheless it needs to be done on a consistent basis, each and every month.
A good time to do this is at the end of each month. Dedicating a morning each month to this task helps keep things under control. There are also bookkeepers who are trained to deal with this task. Looking into this option would free up more time for you to focus on your business. Let me know if you need any assistance in this area. Start this soon and you will be thankful when tax time rolls around next year.