Running and managing your business comes with a lot of responsibilities and seemingly endless tasks! The most tedious and least interesting of these can often get left undone as business owners prefer to focus on things they see as being more interesting or strategic. One task that it is important to not overlook is regularly reconciling your accounting software versus your bank account. Not taking this simple step can be the root cause of many other mistakes. The sum of these can compound and lead to many problems for businesses that can have a high cost in time and money!
Duplication of Expenses
The act of reconciling acts as a financial system of checks and balances that is integral to keeping a business financially on track. By verifying that the expenses and deposits in QuickBooks align with the transactions you can feel confident that the information you make decisions based upon is accurate. Correctly documenting expenses affects cash flow, planning for future expenses/growth, and taxes. If expenses are being duplicated or misplaced then the overall effect on the company’s financials can be severe. Putting in the time to reconcile on a regular basis pays off huge in the long run!
Duplication of Revenue
Equally annoying as duplicating expenses, duplicating revenue can make it look like profits are much better than they actually are. By showing additional income that doesn’t exist it is easy for business owners to overestimate what they can spend on projects/new employees and get themselves in a bind once the mistake is discovered. While this is troublesome as it relates to a false sense of security, it becomes an even larger problem when tax season rolls around. If you are wondering what is even more frustrating than not having as much revenue as you thought, it is paying taxes on revenue that you didn’t actually make.
Have peace of mind
In the end, the simple and tedious solution to all of these problems is regularly reconciling. For many business owners, this might seem like an uphill battle, but it is a battle worth fighting! For those who don’t have the time or inclination to tackle this task themselves, you can always trust your friends at Deitz Consulting to take this off of your plate! All of the peace of mind with none of the hassle!