Now that it’s mid-December, have you reviewed your books to
see what you need to do to be ready for 2012? There’s no better time to
prepare, assuming you haven’t done so already. If you have, that would have
been a good time to prepare. The sooner you get everything together, the
happier you’ll be once January gets here.
And it
will get here, make no mistake.
Have
you reconciled all your accounts? I prefer to reconcile accounts monthly – it’s
much easier to do each month as it passes by, but if you haven’t reconciled at
all yet this year, it’s time to get started.
What
accounts should you reconcile?
1.
Checking accounts
2.
Savings accounts
3.
Line of Credit Accounts
4.
Credit card accounts
These are the obvious ones, but also take a look at other
balance sheet accounts. Do you have loans you’re paying on? Does your year end
balance reconcile to the lender’s year end balance? If you have liabilities,
including the dreaded payroll liabilities, are they accurate? Is your sales tax
liability account accurate?
Why do
we reconcile? For one thing, if you don’t reconcile your checking accounts, you
run the risk of missing income or expenses. If you’ve been recording all your
vehicle payments against the loan account without accounting for interest, you’re
missing out on the interest expense. Your payroll liabilities may have been
paid but not recorded, missing another expense.
Downloading
your transactions from your bank doesn’t mean you’ve reconciled either. How do
you know there aren’t any mistakes? If you don’t reconcile, how will you find
duplicated transactions? Better to be assured your books are correct than to
assume they are. Should you be selected for a random audit, the time to have
cleaned everything up would have been when it happened, not when you’re
panicked about what the IRS is going to find when they ask for your QuickBooks
file, which they now do.
Check
your major purchases too. Did you buy anything during the year that should be
listed as a Fixed Asset? Make sure it’s classified properly. Your tax preparer
will need to know about any purchases during the year, including the date
purchased and amount you paid.
I’m not
big on New Year’s resolutions, but resolving to reconcile your books monthly is
a good resolution, any time you make it. It takes so much less time than trying
to do it at year end, and that’s a good thing, right?
Well, I believe that it’d be quite ideal to start check for these accounts as early as December. That way, you’ll have more time to check these accounts especially if you have numerous transactions. Besides, everyone will their hands full with the holidays on December.
ReplyDeleteReconciling one’s accounts regularly is definitely smart because it helps you keep track of what’s come in and what’s gone out. Accounting software makes account checking, bookkeeping and, eventually, reconciliation much quicker because of the automation of the calculations involved.
ReplyDeleteReconciling your various accounts is an excellent way to monitor the flow of your financial assets. It can help you keep track of your savings as well as your expenses. This can also aid you in the proper handling of your wealth. If you are a computer savvy individual, you can even make use of accounting software to accurately compute the inflow and outflow of your wealth. Having an accurate computation of your finances can help you make wise financial decisions.
ReplyDeleteJamie Shellman
“…if you don’t reconcile your checking accounts, you run the risk of missing income or expenses.”--- In addition, reconciling your accounts will also help you to determine if you have any inaccurate transactions. You’ll never know when someone is committing fraud on your accounts, and you are losing a lot of money over time. So, you must take time to compare each transaction and balance of your accounts.
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