It’s time to wash those windows and do some Spring cleaning.
And while you’re dusting those hard-to-reach places and shampooing the carpets, think about another form of Spring cleaning you should probably do: of your company books.
If you’re set up well with QuickBooks Online or another bookkeeping tool, kudos to you for keeping all those details moving.
But on at least an annual basis, it’s a good idea to have a professional review your books and clean them up. While you probably have many things automated and keep an eye on it, human error happens and it’s easy for a mess to get started and then grow over time.
To make sure you’re on the right track, we’re detailing what you should be regularly on top of and what an accounting professional can review for you.
On a day-to-day and week-to-week basis, there are a few specific items you should be tracking well in your books:
- Assets, including computers and equipment you’ve purchased
- Accounts receivable – money owed to you by your customers
- Accounts payable – debt you owe to suppliers, such as payment for inventory
- Borrowed funds – credit card balances, loans, lines of credit
- Invested funds
You can have QuickBooks Online connected with other apps and create bank rules within the software to guide automatic categorization.
Now, tracking your own books is hard work, so you’ll need to make sure you’re using best practices to keep your information clear and correct. There are many common mistakes that are easy to make:
- Improperly categorizing expenses
- Not reconciling bank accounts
- Not having backups
- Neglecting sales tax
- Not classifying employees correctly
- Managing petty cash poorly
- Not tracking reimbursable expenses
Make sure you’ve set up some written procedures to follow and have good habits when it comes to keeping your books.
Even if you run a tight ship, it’s still always a good investment to have your books regularly examined by an accounting professional.
During an examination of your books, a professional will turn off any automatic bank feeds and comb through every type of transaction, making sure they are matched correctly and the amounts are coming out as they should.
A professional will also:
- Clean up stray entries not sorted well
- Customize reports to ensure they are running as intended
- Balance general ledger records against subsidiary records
- Review audit log to unravel errors
- Reconcile cash accounts
- Verify your retained earnings match your tax return paperwork
- Check the levels of your asset accounts against your company’s current value and inventory levels
- Reconcile credit cards
- Verify your loan balances match your financial statements and that the loan interest is being properly categorized
- Adjust journal entries, including depreciation expenses
- Review your profit and loss statement
- Prepare a balance statement ensuring all credit and debits are accurate
Once a professional has completed a review and fixed everything, they can then help educate and train you on what areas may need to be more tightly managed moving forward.
Especially as you head into tax return time, an examination of your books will make sure everything is pristine to get those records in order. And then you know you’re headed into the rest of the year with everything clean as a whistle.
Get in touch with us today to schedule an appointment and get on the right track to clean up your books!