There are several things that entrepreneurs should be keeping in mind when they do as a bank reconciliation says Edmonton bookkeeping. When the most important reasons for entrepreneurs to do bank reconciliations in their business, is to verify how much money they have in their business, that can help them make financial decisions such as if they have enough money in their business to run payroll, to take dividends out of their company, or if they can pay vendors or make further purchases. If entrepreneurs are able to make purchases is an extremely important financial decision, that they should do a bank reconciliation before they make any financial decisions to verify they have the money to do so.
Edmonton bookkeeping says that business owners need to have just a few things on hand in order to properly reconcile their bank account. They need their bank statements, they need a record of all checks written in that time period, and they need to have the previous bank reconciliation. While there are several different software options that business owners can utilize to do bank reconciliations, Edmonton bookkeeping recommends QuickBooks online, not only because it is user-friendly, but because it has additional features that make doing bank reconciliations much easier and less time-consuming.
The feature that exists in books online that can help entrepreneurs improve the accuracy and speed of doing bank reconciliation is called a bank feed. Edmonton bookkeeping says that what this feature allows is for that entrepreneur to sync up their bank account with the software, so that every time a business owner has a transaction in their bank account, it automatically populates into QuickBooks online. This means, entrepreneurs no longer have to enter every single transaction manually. Not only can this speed up the process, that reduces human error. Even though business owners need to be double-checking the accuracy of feed, it still is much more accurate and quicker than entering everything manually.
Once a business owner has their bank statements, checks and the previous bank reconciliation, the way a business owner is going to do their bank wreck is to review the beginning balance and verify it is the same as the end balance of the previous statement if these two do not match, and entrepreneurs going to have to redo the reconciliation of the previous months balance. This should not take a long time, but it is a necessary part of doing the bank reconciliation says Edmonton bookkeeping. A business owner does not do this step, they are not going to verify the accuracy of the information rendering the bank reconciliation that there able to do useless.
By knowing what to do and what to avoid, entrepreneurs can ensure that they are doing the best bank reconciliation possible so that they can end up with the most accurate information about the state of their finances in order to help them make informed financial decisions in their business that can allow them to avoid running out of money in their business.
If business owners are not taking the time to do bank reconciliation well, or verify the accuracy of it, they are not doing their business any favors says Edmonton bookkeeping. The biggest reason for that is if they are not doing it in such a way that verifies is accuracy, then it is not going to be a useful tool to help them make informed financial decisions in their business. Learning how to do a bank reconciliation well can help an entrepreneur ensure the information they end up with can be useful not only in that month but moving forward.
When a business owner is doing their bank reconciliation, they need to verify the accuracy of the previous two months bank reconciliation to ensure that there beginning balance is matching the end of the balance from their previous statement. Edmonton bookkeeping says that this is an extremely important step because it can ensure the accuracy of the starting point. If a business owner does not do this important step, or if it does not match, then the accuracy of the entire reconciliation will be out. In order to do the bank reconciliation properly, Edmonton bookkeeping says an entrepreneur needs to know what information should be entered into it. Once they have verified the statement accuracy, and they have entered in all of the transactions from the bank statement, as well as insured all of the checks that have been written are entered, a business owner should take note of the date of the statements, the ending balance of that statement and look at a variety of things to confirm the accuracy.
Edmonton bookkeeping says that the reconciliation report will show the entrepreneur there beginning balance, all cleared transactions, all incoming deposits, the ending balance, uncleared balances, and registered balances. The most important aspect to verify the accuracy of says Edmonton bookkeeping is the ending and uncleared balances. To verify that the ending balance matches the ending balance of the bank statement, an entrepreneur can verify that the bank reconciliation has been done properly. Also, business owners need to be very aware of any uncleared balances. The reason this is important because if uncleared balances appear in more than one statement, it is usually indicative of an error. Before entrepreneurs should assume any uncleared balances are in fact errors, they should check to see if it actually matches up with any uncashed checks. Since checks go stale within six months, business owners should ensure their calling their clients before six months to see if they received the check. If not, they can write another one and put a stop payment on that check. This way, entrepreneurs can ensure that all of the uncleared balances are accurate.
By taking the time to do proper bank reconciliation, and taking the time to verify its accuracy, entrepreneurs can be certain that they are ending up with a tool that can help them accurately verify how much money they have in their business that they can use.