Being a business owner, it is important to reconcile your bank accounts right from the start. The bank reconciliation process can help you detect accounting issues and even fraud, bank account reconciliation can help you stay on top of your business’s finances and understand what is happening in your accounts. In today’s blog, you will come to know how a bookkeeper can help you with the bank account reconciliation process. Let’s get started:
What is Bank Reconciliation?
Bank account reconciliation is a process, in which a bookkeeper will compare data of your business books against the company’s bank account, ensuring that both have the same data on a particular date. If the data is exactly matched, it means your bank account is reconciled. While bank account reconciliation used to be a manual process that will take a considerable amount of time, with the invention of new software, now, bank account reconciliation becomes a more efficient process. If you are unaware of the bank account reconciliation process, then you can hire bookkeepers in Melbourne.
Purpose of Bank Account Reconciliation
There are various reasons to reconcile bank accounts on a daily basis. If you don’t perform this process, then you will not have an idea of how much money your business has. The following are some reasons why you need to perform this process:
Spot and Remove Errors
If there are bookkeeping mistakes, then with the help of this process, those mistakes can be removed.
Identify Fraud and Wrongful Payments
When you review your expenses, then it would become easy for you to identify fraud and suspicious activity.
Check Out Business’s Performance
Daily verification of numbers will help you know how your business is doing and you will come to know the financial status of your business.
Prepared for Tax Season
To file a tax return, you need to have a reconciled record of business expenses and income.
Track Financial Performance
To track how much money you are making and spending, you need a fully reconciled record of your business.
How a Bookkeeper Can Help You?
First of all, you need to keep one thing in your mind and that is, you need to understand that bank account reconciliation should not be performed annually or quarterly, but it should be performed weekly, at least. However, professional companies prefer doing daily bank account reconciliation. The tip that we would like to give you is, that if you wait a longer period to reconcile your bank accounts, then it can lead to various mistakes and may you get into trouble. Hence, the bookkeepers of Melbourne can help you with this complicated and time-consuming process to let you focus on other business operations.
- Fetch your business and bank records: you need to fetch a bank statement for the time you are reconciling bank accounts. After that, you need your accounting records for the same period of time.
- Check out your opening balance: now, a bookkeeper will check and match the opening balance of your bank statement against the opening balance mentioned in your accounting records.
- Review your transactions: after that, you need to ensure that transactions on your company’s accounting records match the transactions on your bank statements. If a bookkeeper finds any mistake in the transaction, then he/she will explore it and fix that issue accordingly.
- Review your closing balance: once a bookkeeper has reconciled all your financial transactions, then the bookkeeper will double-check the closing balance of the bank statement and your accounting records. If it doesn’t match, then the bookkeeper will again check the transactions to know what went wrong.
If your business books are outdated, then it will create problems when you need to file tax returns. Despite this, make sure to hire an accountant for your business, so he/she can take care of your business during the tax season. For this, you can search for ‘accountants near me’ to find an accountant near your location.
Here, we would like to give you one tip, make sure you are using a separate bank account for your business. In this way, you will know that all financial transactions on your bank statements are related to your business and they must appear in your business account. If they are not synchronised, then you need to find out why. If you are managing business books and accounts on your own, then it is more likely that you have mistyped something, missed a transaction, or entered it at the wrong time. Reconciling bank accounts will become difficult for you if you are using the same account for personal as well as business purposes. Therefore, it is suggested to hire a bookkeeper who will help you with this process.
For proper reconciliation of bank accounts, your business books must be updated. Therefore, bookkeeping for small businesses is important, so make sure you have a professional bookkeeper to look after your business books. For professional bookkeeping services, you can reach the Reliable Bookkeeping Services provider.