When entrepreneurs are new in their business says Edmonton bookkeeping, they may not understand the importance of staying on top of keeping their financial information updated. However, entrepreneurs should get into the habit of reconciling their bank account on a regular basis. The reason for this is because this can be an important tool that entrepreneurs can use in order to understand how much money they have in their business in order to make financial decisions such as being able to run payroll, take dividends of their corporation, as well as taking asset purchases or paying vendors.
It is important that entrepreneurs not only do these bank reconciliation reports on a regular basis but take the due diligence and care required to ensure that they are verifying the accuracy of those reports. Edmonton bookkeeping says that if entrepreneurs are not adequately verifying the accuracy of their information, they may end up with the report that is inaccurate. If they use that report to make financial decisions in their business, it could cause them to spend more money than they have, or trigger errors farther along in their business like at their fiscal year-end.
One of the most important ways that entrepreneurs can ensure that they are doing the best bank reconciliation report that they possibly can, is to set aside time in their schedule to do it. Most entrepreneurs know that if they put something in their schedule, it is far more likely to get done. Therefore, if business owners have in their schedule to do this report, Bill be able to have the time devoted to it, be able to do it uninterrupted and do it well. Many entrepreneurs might not understand how they can schedule it if there supposed to be doing it before they make any payments, and Edmonton bookkeeping says that the best way is to also schedule all of their payments. Payroll is an easy one because that should get done on a schedule, but business owners can also schedule all the rest of their payments and purchases so that they only have to do a bank reconciliation report once or twice a month. A great practice is to schedule it along with payroll. An entrepreneur can do a bank reconciliation report, verify that they have enough money to pay their employees and run payroll, and after they verified that, see how much money they have leftover and what vendor payments they can make. That way, a business owner only has to do a bank reconciliation reports twice a month, and they have successfully verified that they have enough money to pay their staff and bills.
Because of the importance of this report, and how it can help them understand how much money they have in their business, by using the schedule, business owners can start to get into the habit of finding out how much money they have in their business before making any purchases. By getting into this habit early on, entrepreneurs can avoid running out of money in their business, which is the second most common reason why businesses in Canada fail.
When entrepreneurs understand exactly how important doing bank reconciliation reports are says Edmonton bookkeeping, and how easy it can be to schedule them then the next thing that entrepreneurs should learn, is not only how to do one, but how to double-check they were reconciliation along the way to end up with the most accurate report possible. If entrepreneurs think that it is so easy to do and they end up not being careful enough, they can end up with a sloppy report that does not contain accurate information and if entrepreneurs use that to make financial decisions in their business, they may end up for decisions. Therefore learning how to do a report well and error-free is important.
In order to start their bank reconciliation report accurately, Edmonton bookkeeping says that entrepreneurs need to take the last bank reconciliation report and ensure that the ending balance matches the opening balance on their current bank statement. By verifying this continuity is accurate, business owners can ensure that their report that they start with is starting in the right spot, which increases the possibility of having an accurate report.
The next thing that entrepreneurs need to do, ensures that all of the transactions in their bank statements are counted for. By having a list of all of the checks that they have written in the past month, along with all of the transactions into and out of their business bank account business owners can enter all of the information and then double-check it for accuracy. Since they are human, reviewing all of the transactions is vital to ensuring accuracy. This is especially true if the business is had an extremely busy month, and there are a lot of transactions. Edmonton bookkeeping says that some entrepreneurs are using accounting software like QuickBooks Online, and that has a bank feed feature that allows entrepreneurs to automate the process of entering transactions into the software. By automating that process, entrepreneurs do not need to manually enter the information which is faster as well as more accurate than manual entry however, Edmonton bookkeeping cautions that entrepreneurs do not use this automated process to eliminate the need for double-checking. It is extremely important that entrepreneurs double-check even automated information, to ensure its accuracy. Software is not infallible, and recognizing that can help entrepreneurs double-check the information.
By learning how to start their bank reconciliation report properly and accurately, and the importance of double-checking the transactions, business owners can ensure that they are doing everything that they can to ensure the accuracy of the information in the bank reconciliation report. Having the most accurate information possible can help entrepreneurs make an informed financial decision in their business whenever they need to, whether it is payroll, paying bills, or even taking dividends out of their own corporation.