If entrepreneurs do not understand the importance of accurate bank reconciliation, Edmonton bookkeeping says that they may not take the time to do what accurately, or verify its accuracy at the end. Having an accurate bank reconciliation every time an entrepreneur is going to make a financial decision in their business, is extremely important for them to verify they have the money in order to make that decision.
Entrepreneurs need to understand why they should do bank reconciliation in the first place. If the business owner is depending on looking at their bank balance in order to verify the finances they have in order to make purchases in their business, they may cause themselves to spend money that they do not have in their business. An example of this says Edmonton bookkeeping, is if the business owner has just finished writing several thousand dollars worth of checks to vendors. Two days later they want to take some dividends out of their corporation, and look at their bank statement in order to see how much money they have. Without taking into consideration the checks that they have written, a bank statement may show a business owner that they have several thousand dollars more than they have. However, if a business owner does a bank reconciliation, they will be creating reports that take into consideration all of the transactions that are scheduled to come out of the bank account as well as all of the transactions that are scheduled to go in. An entrepreneur is going to be able to end up with a clearer picture of how much money they have in their business.
Edmonton bookkeeping says that business owners should get into the habit of doing a bank reconciliation any time they make purchases, disburse payments, or when payroll. By being able to accurately see how much money they have in their business, can help business owners not only avoid running out of money by not making purchases they cannot afford, can help them plan-making larger purchases so that they can make better financial decisions as well as grow their business.
There are only a few things that a business owner needs in order to do a bank reconciliation says Edmonton bookkeeping. They need to have a copy of the previous reconciliation, as well they need to have their bank statements and a copy of all of the checks that they have written.
Many entrepreneurs wonder what the best software is for doing great bank reconciliation. Edmonton bookkeeping does recommend QuickBooks online, but to the type of software is not as important as taking the time to do it properly and to check it. Even a good bank reconciliation can be done using an Excel spreadsheet, or even a pencil and a ledger sheet. By learning how to do it properly, entrepreneurs can end up with a tool that can help them make the best financial decisions they can then their business, and avoid running out of money which causes so many other people to have to close your business down.
One of the most important things that an entrepreneur can do in their business, is to take the time to do an accurate bank reconciliation and verify its accuracy says Edmonton bookkeeping. By doing this properly, business owners can end up with a great tool that can help them make informed financial decisions in their business.
When the way that entrepreneurs can help their bank reconciliations be quicker and more accurate, is by using technology that can help them along the way. Ten bookkeeping says that QuickBooks online has a great feature that allows entrepreneurs to connect their accounting software with their bank account. What this does is for every transaction they goes into or comes out of their bank is entered automatically into QuickBooks online. Edmonton bookkeeping says that this eliminates the need to automatically enter every single transaction. Not only can this save an extremely large amount of time, but it can also help entrepreneurs avoid a human error that can happen when entrepreneurs are entering a large number of transactions. While business owners still have to do double-check the information and verify its accuracy, even with the double-checking, this automated process ends up being faster and more accurate.
Once an entrepreneur has verified the beginning balance of their bank reconciliation is the same as the ending balance of their last statements, they can then ensure all of the transactions have been entered properly so that they can date it and track the ending balance of their statements. Once they have done this, Edmonton bookkeeping can verify that their bank reconciliation is done, and the only thing they need to do is verify the accuracy of it. What they should do to verify the accuracy of the information, is look at the cleared transactions to ensure that it matches their bank statement, that incoming deposits are correct, that the ending balance matches, and in the case of an uncleared balance says Edmonton bookkeeping, business owners should double-check to ensure that all of the uncleared balances have a check or transaction that matches up to it. Uncleared balances are either transactions that have not yet deposited into or out of the bank account or are errors. Business owners who see uncleared transactions should first look to ensure that it is not a mistake, and once it is not a mistake, they should find out why it has not cleared yet. A great way to do this is if the uncleared balance remains uncleared for more than one statement, it is most likely an error. Since most balances take one or two days to clear, if it is taken longer than that, it is usually an indication of a mistake.
By learning how to properly do a bank reconciliation as well as check the accuracy of its, entrepreneurs can ensure that they have a great report that can help them determine how much money they have in their business.