If you ask any seasoned business owner what the key to success is, they will respond with bookkeeping. It is an essential part of owning and operating a business and doing it well. Without accurate books, you will find yourself without direction. When it comes to bookkeeping and financials, the two go hand in hand. When there are good bookkeeping practices happening, there is also a clear picture of what the financials of your business look like. Mark Dicus & Company is here to talk about the correlation between financials and good bookkeeping.
Bookkeeping Leads to Financial Success
When it comes to financials, you want your financials to meet certain requirements. Without them, you are going to be floundering. You need your financials to be:
– Accurate: All transactions need to be categorized correctly, and bank accounts need to be reconciled
– Timely: Your financial statements should be ready after the month ends.
– Useful: You always want the financial reports you’re looking at to be the number that truly matter when running a business.
– Stable: Even if the period is closed, the numbers shouldn’t be changing and should remain the same.
Bookkeeping Systems Produce Clean Numbers
The bookkeeping system that you use should remain the same month after month. When there are deviations, it can cause problems. Here are some of the key points that should be involved in good bookkeeping:
– Collect the Right Data: You have to collect the right data to provide complete books. This includes payments, receipts, payroll reports, invoices, bank statements and credit card activity. There are tools that can help you collect the full picture and all the data needed to keep your books complete and organized. Many business owners turn this portion over to professionals to help them get it completed.
– Categorize Transactions: The key to good bookkeeping is to categorize transactions so that there is a chart of accounts that reflects business operations. It is a process where clean categorization works to turn raw transaction data into useful information.
– Reconcile Accounts: It is vital to compare the numbers in your accounting software with the numbers that are appearing in your bank statements. This needs to be done on a monthly basis so that any errors can be caught before they get too out of hand. This could include duplicate transactions, expenses that are missing, and discrepancies in in balance sheets.
– Review: Another important part of bookkeeping is reviewing financial records to ensure that the numbers match up.
– Close Month Out: The last step in the process is to close the month. It is a step that is often referred to as the month-end close. That is how you know you can rely on those financial statements.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you are having a difficult time staying on top of your bookkeeping as a business owner, it may be time to turn it over to the professionals at Mark Dicus & Company to take care of it for you. Call us today!