Small business bookkeeping deadly sin #1: Not reconciling your records to your bank statementWayne Burgan
A bank reconciliation is one of the first things your business accountant and tax auditor will want to see, and is an easy way of ensuring your finances are up to date. However, not completing one is the first Deadly Sin that is commonly committed by small business owners. It is so important because it indicates the quality of your records and that your accounts show all that went through your bank.
- Are a headache for your accountant and will require more time to analyse.
- You may pay more than necessary to the Tax Office because you missed something like a tax deductible expense, resulting in less profit for your business.
- Cause dramas when you have a tax audit. More time will be spent by the tax inspector looking into your affairs because their suspicions will be raised by the lack of care taken in maintaining your records.
Therefore, you need to make sure you are taking time every month to reconcile (match) your records to bank statements. We recommend performing this task at the end of the month as this allows you to identify any mistakes. These mistakes could range from sending a transaction to the wrong account or missing particular transactions.
Cashflow Manager makes it easy to reconcile your records with a step by step wizard. Manually check the amounts against your bank statement or import those statements into Cashflow Manager, you decide. After you have done this you can complete a bank reconciliation. It’s as easy and quick as that.
For more information, read “The 9 Deadly Small Business Bookkeeping Sins… And How You Can Avoid Them”
Keep your eyes peeled for Deadly Sin #2.