Did anyone ever sit you down and teach you how to balance your checkbook? If you’re under 30, I’m guessing probably not. (Actually, if you’re under 30, I’m guessing you don’t even have a checkbook). Most people just check their bank balance to make sure they can afford something and then pay it, never thinking about it again.
Fine. Okay…fine. I mean…no, I’m fine. I’m not stressed out by this at all.
Except YES I AM.
Even if you’re not balancing your checkbook, please please please reconcile your business checking, savings, and credit cards.
If you have NO idea what I’m talking about, you may be thinking it’s over your head, but reconciling your accounts just means that you’re comparing what you’ve manually input into your spreadsheet or accounting software to your bank statement, to make sure everything that’s cleared the bank is in your reporting software and vice versa. That’s it! Pretty easy. You can use software, you can print out statements and check off each transaction as you find it in your system (how satisfying), whatever gets the job done. Just do it in some kinda way. And here’s why:
- You’ll catch duplicates. Maybe you entered something twice into your system, maybe you were charged twice. Wouldn’t you like to know and correct it ASAP?
- You’ll catch personal transactions you accidentally charged to your business and be able to record it as an owner’s draw and/or reimburse the business.
- You’ll be more aware of what you’re spending.
- You’ll always have accurate books – which you’ll want in order to make better business decisions and report accurately at tax time.
- You might find money! As I said, you could have been charged twice for something, charged for something you never received, charged for a subscription you no longer use. Reconciling catches all that. You might also, like me, find that you THOUGHT you had an ACH payment set up to come into your account that never processed. If I didn’t reconcile my accounts, I recently would have missed out on $850 of clean up income!
If reconciling just isn’t your thing (you mean not everyone gets a little heart flutter at the word like us bookkeepers?), maybe it’s time to outsource!