How to Clean Your Accounting Records with These Simple Steps
Running a business is not an easy task. You are managing inventory, employees, customers, marketing, partnerships… the list goes on and on and on. At CPA By Choice we recognize the time and effort that YOU put into your business, therefore we want to ensure your bookkeeping and accounting records are receiving the attention it needs.
Business owners’ busy schedules often cause accounting records to be overlooked. Organized accounting records have a positive impact on your business, it leads to effective decision-making, superior presentation when seeking investors/partners, robust internal controls, and stronger preparation for an audit.
We’ll share some steps on how to clean your accounting records:
Separate Business and Personal Banking
A separate business account provides a more accurate financial statement for your business, which also helps you while paying taxes and in tracking deductible expenses. Separating business and personal banking also saves you time from having to sort business transactions from personal ones.
Establish an Appropriate Accounting System
Establish an effective bookkeeping system. For some business owners this may mean hiring a dedicated bookkeeper in-house, outsourcing accounting, integrating an accounting software or all of the above. In addition, centralize all source documents so that all invoices, billings, and expense reports go to one destination. Once this central system receives documentation, they can route it to the proper accounting department. You do not want documents being received in different departments and placed where it is likely to get lost.
Reconcile Your Business Books
One of the most important steps in cleaning your accounting records is to reconcile your bank statements. There’s no reason to use a bookkeeping system if you are not going to consistently update it. Schedule a monthly appointment for yourself to reconcile your bank statements and set your budget goals for the upcoming month. Furthermore, log your transactions weekly to make monthly reconciliation a faster process. When reconciling your cash and credit accounts, ensure that each transaction is verified against a source document, and that each transaction is verified against your bank statements.
Create Your Financial Reports
Once you have a system in place and your books are reconciled, you’ll have the information required to produce your businesses’ financial statements. Your financial statements reveal the historical data of your business and as such, are among the most important resources at your disposal when it comes to decision-making. To learn more about 3 key financial statements click here.
Contact an Accounting Team
Outsourcing your accounting services can be more cost effective because it allows your company to hire quality, well-trained professionals for a fraction of the cost of internal hires. Outsourced accounting professionals provide an objective point of view, their priority is to impart their financial knowledge so that your business can continue to scale and be profitable. In addition, accounting experts are up-to-date on all the latest regulatory requirements. They are familiar with what is happening across the industry and carefully monitor relevant laws and regulations to stay current on processes.
At CPA By Choice we understand that cleaning your accounting records can be extensive, if you are unsure on how to get started or need assistance, contact us. We are available to answer your questions, feel free to call us or send us a message.