As a small business owner one of the most important things you can do is have accurate accounting records. But we can already hear you saying, “I have more important things to do than to keep my own books.” We can help you assess your bookkeeping needs. Should you pay an employee to have them done in house or would it be more cost effective to have them outsourced? There are several advantages and disadvantages to both. We can help you solve this challenge, so you can get back to the job of running your business and generating profits!
Each month or quarter your accounting firm or department should do the following things for you…
These tasks form the solid foundation of your small business accounting system. You should be able to customize this function to provide you with the accurate and timely information you desire and you should not have to settle for some compiled report that is two months old. Your business coach can help ensure your get what you need to stay informed.
Bank Reconciliation
Reconciling your business checking account each month allow you to have access of your bank, accounting, and tax records in a real time format, not out dated worthless historical numbers.
Reconciling your accounts each month allows you to...
- Identify lost checks, lost deposits and unauthorized wire transactions.
- Detect and prevent excess/unjustified bank charges and ensures transactions are posted correctly by your bank.
- Detect and prevent embezzlement of funds from within your company.
- Know how your business is doing? You can't really know unless all accounts are reconciled and properly accounted for on your financial statement.
- Manage your cash more effectively. Proper management of funds not only saves money, it makes money for you.
- Protect yourself. By timely reconciling and promptly objecting to your bank about any unauthorized, fraudulent or forged checks presented to your bank and paid by that bank, you can relieve your agency of responsibility for the shortfall and transfer the risk to the bank. This reason to reconcile alone should be enough. Crime exists.
- Sleep Better. You will sleep more peacefully at night knowing your bank accounts are reconciled, in balance and that all escrow funds, accounts, checks and disbursed funds are properly accounted for.
Income Statement
An income statement, otherwise known as a profit and loss statement, basically adds an itemized list of all your revenues and subtracts an itemized list of all your expenses to come up with a profit or loss for the period.
- An income statement allows you to...
- Track revenues and expenses so that you can determine the operating performance of your business.
- Determine what areas of your business are over-budget or under-budget.
- Identify specific items that are causing unexpected expenditures. Like phone, fax, mail, or supply expenses.
- Track dramatic increases in product returns or cost of goods sold as a percentage of sales.
- Determine your income tax liability.
Balance Sheet A balance sheet gives you a snapshot of your business' financial condition at a specific moment in time.
A balance sheet helps you...
- Quickly get a handle on the financial strength and capabilities of your business.
- Identify and analyze trends, particularly in the area of receivables and payables. For example, if your receivables cycle is lengthening, maybe you can collect your receivables more aggressively.
- Determine if your business is in a position to expand.
- Determine if your business can easily handle the normal financial ebbs and flows of revenues and expenses.
- Determine if you need to take immediate steps to bolster cash reserves.
- Determine if your business has been slowing down payables to forestall an inevitable cash shortage.
Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors who are considering how much credit to grant you.
Maintaining a Clean General Ledger The general ledger is the core of your company's financial records. These records constitute the central "books" of your system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your books.
Your accounting firm or department should review your general ledger system each month to hunt down any discrepancies such as double billings or any unrecorded payments. They should fix the discrepancies so your books are always accurate and kept in tiptop shape.
Consultations
Your accounting firm or department should always be available to spend time with you so you fully understand how to interpret and utilize the financial information being provided. Consultations should already be included in their price and you should feel free to call or inquire whenever you have a question or concern.
If you'd like to learn more about how business coaching can help you get the Small Business Accounting Service you deserve, please complete this form.
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