Bank reconciliations are very important says Edmonton bookkeeping, because that is the report that will let a business owner know if they are able to spend the money in their business that they want to. Before business owner makes any financial decisions in their business, whether it is running payroll, taking dividends out of their corporation themselves, or making any purchases, entrepreneurs should do a bank reconciliation to ensure that they have the money in their business to do so. If entrepreneurs are not checking to make sure they have the money in their business, they may end up spending more money than they have. This could trigger all sorts of issues like bounced payments and missing payroll. In order to ensure that business owners making the best financial decisions possible, there are several things that they should know about doing a great bank reconciliation.
One of the first things that entrepreneurs should keep in mind about doing a great bank reconciliation, is to do it before they make any payments. Therefore, entrepreneurs should get organized and no when they are going to do Edmonton Bookkeeping so they can set aside the right time. They know that they have to run payroll every two weeks, so during the bank reconciliation at the same time they are doing payroll is a great habit to get into. Also, business owners should also group all of their payments together, instead of writing checks or scheduling payments every day, if they also do it about once or twice a month, they will be able to do a bank reconciliation before each payment disbursement, so that they can minimize the number of times they have to do a bank reconciliation to verify the amount of money that they have.
Scheduled when they are going to disburse all of their payments, then they can create a time bank schedule says Edmonton bookkeeping on when they are going to do the bank reconciliation. Being able to be uninterrupted and do it consistently and well means that entrepreneurs need to have that time set aside. When they are ready to work on it, they need to get their bank statement, a record of all checks written in the last time period, as well as their previous bank reconciliation. Once they have their time set aside and these three documents, a business owner is ready to do a great bank reconciliation.
While business owners can do bank reconciliation with any Edmonton Bookkeeping or accounting software or even just using a spreadsheet like Excel, technology can significantly help an entrepreneur save time with their bank reconciliation. The software QuickBooks online has a feature called bank feed that allows entrepreneurs to link up their business bank account with their QuickBooks software so that all transactions into and out of the bank account are automatic. This can save significant amounts of time, because instead of entrepreneurs having to enter every single transaction, the date and the amount as well as the proper code, all happens automatically and all an entrepreneur needs to do is verify the accuracy of the information. Not only can this save significant amounts of time, but is also far more accurate and easier.
One of the most important things that an entrepreneur can do in business, is to help themselves avoid running out of money says Edmonton bookkeeping. One of the tools that an entrepreneur has in order to avoid this is bank reconciliations. What bank reconciliations are, are the reports that business owners can run in their business that help them know how much money they have in their business so that they know how much money they can spend. This can help them whether they are making an asset purchase, running payroll, or paying their vendors. If entrepreneurs are able to run a bank reconciliation before any time they disburse money, they will be able to know how much money they have in their business to do so.
Many entrepreneurs do not understand why this is important, and believe that they should be able to look at their bank balance any time they make financial decisions, and the reason why checking their bank statement is not a good tool to know how much money they have in their business says Edmonton bookkeeping, is because a bank balance alone is not going to tell an entrepreneur how much money they have to use. Any uncleared checks or disbursements of money can make the bank account look like it has far more money and it use than it does. The bank reconciliation, on the other hand, can help entrepreneurs see how much money they have after all of those payments and checks been taken into consideration.
When an entrepreneur does a great bank reconciliation, they are going to be able to see what the beginning balance is in their business, all of the cleared transactions, all incoming deposits that they should be able to see enter their bank account, and the ending balance. Russ going to have some uncleared balances listed as well as a registered balance. The reason entrepreneurs should be aware of uncleared balances is that those are all of the transactions that have not appeared in the bank account yet. Whether it is a debit or credit that is coming into the bank account that has not been entered, or if it is a check that has not been cashed. The reason why entrepreneurs should be aware of this is that uncleared transactions should not show up on more than one bank reconciliation and if it is it is usually an indication of an error. If entrepreneurs see those uncleared transactions on more than one bank reconciliation, they should work to verify the accuracy of the information.
By learning how to do great bank reconciliation, and taking the time to do it well and verifying the accuracy of the information, it becomes a great tool for entrepreneurs to use in their business to help them avoid running out of money in their business.