Bookkeeping is often an underappreciated aspect of running a business. Yet, if it isn’t done well, it can become an overwhelming problem. When cash balances aren’t at their expected levels or profits appear to be soaring when, in reality, they’re not, messy bookkeeping is likely the culprit.
Read below for tips to clean up your business bookkeeping. (And if you need professional assistance, complete the form below to contact us.)
Perform Bank Reconciliations
Without a doubt, the cash account is the most important account for a business. The cash account drives so much of what happens for any organization. Decisions are made about large purchases, payroll checks are written, and vendor invoices are paid based on the money shown in the cash account. However, if you are not performing regular reconciliations of your business cash account to the bank statements, then you could find yourself in trouble.
No one wants to have a check bounce (causes extra fees, embarrassment, etc.), and an easy way to prevent that is to perform monthly bank reconciliations. It doesn’t take very long if done regularly. Furthermore, many bank accounts have fees and service charges for owning the account. If these are not factored into the business cash balance, then you risk running the account towards a negative balance.
Analyze Financial Statements
Another simple but effective task to clean up your business bookkeeping is to prepare a set of financial statements. If you have accounting software, then generating financial statements takes just a few clicks. However, if you are operating on spreadsheets or even a paper ledger, it can be a bit more cumbersome but not impossible.
The important aspect of having the latest financial statements is they present the current financial position of the business for the year to date. Seeing the numbers in black and white can help you spot an account balance that doesn’t make sense. For example, the profit and loss statement could be showing a profit, but you know several expense transactions aren’t factored into that number. It’s hard to have a good idea of what the “health” of your business is if you don’t regularly prepare and analyze your business financial statements.
Consider Hiring Morgan & Associates to Help Clean Up Your Bookkeeping
Having a well-run business means having good bookkeeping practices. If you’re wondering if your bookkeeping could be improved or if you’re already certain you need help, contact us at Morgan & Associates. We have the know-how to get your bookkeeping on the right track.