Nothing can be more time consuming or annoying than reconciling your bank, credit card, and other type of balance sheet accounts. So why is it so important? Reconciling your books monthly ensures that all your revenues and expenses are recorded, and the data is validated. This data can be used to make informed business decisions which will set you up for success. Even if you have a small number of transactions each month, you should still be reconciling.
Remember, a lost receipt is a lost deduction, and a lost deduction is more taxes you will have to pay at the end of the year. When you reconcile your accounts, you are balancing your books to the balance on your statement. Of course, the proper classification of the ins and outs of these transactions is essential to ensure you are accurately reporting these revenues and expenses to the IRS. Furthermore, your CPA or tax preparer will love you for it because it provides assurance they are assisting you in completing an accurate return which is supported by a solid set of financial statements.
Finally, reconciling your accounts forces you to monitor your accounts for fraudulent activity. If anyone is improperly accessing or spending funds or if funds are missing; you will discover it through the reconciliation process. Even some banks make errors! This is your opportunity to make sure your bank is taking care of your cash, and you can hold them accountable when you observe any of their missteps.
If you have any questions, feel free to contact Say Bookkeeping at 786-292-9519 or send an email to [email protected]. We are happy to help!