Author: Kim

Account Reconciliation: What Is It And Do You Really Need To Do It?

If you’ve been shopping around for bookkeeping services, you’ve likely seen Account Reconciliation listed as one of the services offered.  But what is it and do you really need it?

account reconciliation

What is Account Reconciliation?

Account Reconciliation is simply a fancy way of saying balancing your business bank accounts and credit card accounts!  It’s just like balancing your personal checkbook.  You do that every month, right?

If not, here’s a little refresher.  Account reconciliation is matching up the monthly bank statement to the transactions that you’ve recorded on your end.  It’s making sure all of the deposits that you think went into your account, actually did.  It’s confirming that all of the purchases and expenses you paid for with that account, have been posted to your account.  Nothing more, nothing less.

You may be thinking to yourself, “Kim, is this really necessary?”  Yes, it is and here’s why.

Mistakes Happen

Everyone makes mistakes, even people that work at banks!  It’s happened to me!

My husband and I own a small retail shop together and we deposit the previous day’s cash and checks every day.  A couple of years ago, I noticed that one of our deposits didn’t post to our account.  I went back to the branch where the deposit was made and asked the manager to look into it.  One of the checks we had included in the deposit in question was for a mutual customer that the bank and our business had.  When processing our deposit, the teller has mistakenly typed in the account number on the customer’s check instead of the account number on our deposit slip.  Oops!  That innocent mistake could have cost my business hundreds of dollars.

Fraud

Another reason account reconciliation is necessary is to help protect you and your business from fraud.  Just last week I tried to use my company’s debit card and the charge was denied.  I called my bank to find out why and I learned that there were a couple of attempted charges that they picked up as fraudulent.  If they had let those charges go through and I didn’t reconcile my account, I would have been out hundreds of dollars.  That is not a risk I can afford to take and I’m guessing neither can you!

Don’t have the time to reconcile your accounts?

I would love to help you!  Believe it or not, I think reconciling accounts is one of the best parts of my job!  I love seeing the green check mark in QuickBooks Online when an account balances.  I’m a nerd, I know!  🙂

Contact me today to schedule a free 30-minute consultation!  I look forward to talking with you!

the bookkeeping mama

 

 

Do you really need a budget for your at-home business?

Yes!  Yes, you do!

I know, I know.  No one likes to create them.  No one likes to stick to them.

But they are absolutely necessary if you want to be successful with your at-home business.

First, let’s get the name issue out of the way.  If you don’t like the word budget, then call it something else:  Business Blueprint, Financial Roadmap, Annual Financial Goals.  Do any of those sound better to you?  Good.  Pick one.

Now let’s move on to why it’s so important.

What is the purpose of a budget?  Many people think of it as something that limits our spending.  That is true and when we are talking about a personal budget that can certain seem like a bad thing (I can only spend how much on eating out?!).  But when we are talking about a business budget, limiting your expenses is a good thing.

However, that’s only half of the equation.

The other half is your revenue or sales.  How much money to you want (or need) to bring into your business?

Without a plan for your revenue AND your expenses, how do you know you are going to achieve the amount of income you desire?  I’m sure you have an income number in mind, but without knowing how you are going to get to that number could cost you time and money along the way.  You will more than likely make some mistakes as you grow your business (we all do!) and they could be huge, costly mistakes.  However, with a budget as a guide, you will be able to see in short order when and where you are veering off course.  You will then be able to make the necessary adjustments quickly.

Think of it this way, you live in Boston and want to drive to New York City which should take you about 4 hours.  You know the general direction that you need to head, but without a roadmap you could easily end up way off course and take you several more hours to get to NYC.  This would cost you both time and money.  Now even with a roadmap, you could make a wrong turn, but chances are you would quickly realize your mistake and make the needed adjustments to get you back on track.

This is what a budget does for your business…it helps you stay on track and when the inevitable wrong turn occurs, it helps you get back on track to achieving your financial goals.

Do you have any questions about budgets?  Please comment and I will address them in future posts.

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