Also, there is nothing wrong with adjusting those goals to meet the current business climate. You may find that you’ve received retainer deposits that you’ve not applied to a client invoice, or you may only have used a part of the deposit. An open client deposit report will point this out so you can calculate your revenue with more atp and adp accuracy and better manage the client’s funds. You must check your inventory records if you sell products to ensure that all purchases and sales have been appropriately documented.
Once you’ve verified all your documentation is in order, you can put together financial statements for your clients. You should regularly check in to ensure the reporting you are providing is useful for them so you can ensure you are not wasting time producing reports that are not being used. Regular reconciliation prevents errors from snowballing and ensures your financial records are accurate and reliable. By carefully addressing these discrepancies, you can ensure your bank records and your accounting software match, providing you with an accurate picture of your financial situation. In this article, you’ll find a best practice bookkeeping checklist template, plus a checklist for emergency bookkeeping cleanup projects.
Additionally, the prior year’s balance sheet should align with the one reported on your tax return. Accurate bookkeeping is the key to getting a clear picture of your business’s health. A cleanup doesn’t just tame the clutter; it empowers you to understand your cash flow, identify areas for growth, and ultimately, take control of your financial future.
This seemingly simple step is crucial for gaining valuable financial insights from your data. By accurately categorizing each transaction, you can track your spending habits, identify areas for potential overhead savings, and monitor the health of your income streams. Jeremy writes for small business owners who need actionable information on tax strategy, efficient accounting practices, and plans for long-term growth. Small business owners spend around sixteen hours² each week on administrative work, which includes entering bookkeeping details. Keeping track of ongoing fixed transactions makes cash flow management and bookkeeping easier.
- Your vendors only trust you as much as you are forthcoming with your payments.
- 👇 Download the Weekly Reconciliation Template from the Karbon Template to streamline your periodic reconciliations.
- This report also allows you to forecast your sales and expenses for the next fiscal year.
- If you don’t have a budget, comparing your current income to previous months can be a good way to prepare for the future.
Monthly bookkeeping made easy: Follow this checklist (with template)
If you’re in a peak period or just completed one, you might want to review your inventory more often to ensure things go smoothly. If you’re not already using an online, cloud-based accounting system , you should consider it for next year. As a small business owner, you can view the balance sheet report as a financial snapshot of your business. Towards the bottom of the report, take note of the section labelled “Retained Earnings.” This line item tracks your company’s net worth over several years. By auditing your receivables, you can ensure that all unpaid bills are appropriately recorded and that you follow up with clients/customers who still need to pay. Deposits, withdrawals, and any fees or charges are all included in this.
Review and categorize payroll records
You can request information from your clients and Karbon will send automatic email reminders until the request has been completed. Answering these questions will give you an idea of the resources you need to dedicate to the cleanup project, which will help set your price correctly. From then, you’ll be better equipped to analyze their financial data and business needs, helping them make clear business decisions. Duplicates should be merged, accounts should be named logically, unused accounts should be removed, and new accounts should be created as necessary. 👇 Download the First-Time Penalty Abatement Letter template from the Karbon Template Library to apply for penalty relief for your clients. Save time when completing weekly reconciliations with this standardized and repeatable workflow.
Gather and organize client information
You can use this report to find out how profitable your business is and determine the cost of running your business. This report also allows you to forecast your sales and expenses for the next fiscal year. When it comes to tidying up your books, create a checklist to help you track what needs done and cross items off your to-do list. You can also create adjusting entries to record depreciation and amortization, an allowance for doubtful accounts, and accrued revenue or expenses. Try to aim for reconciling your accounts each month for tidy books. At some point, you might do the opposite of a data entry error, too.
Today, I’m going to lay out a case for why bookkeeping is essential if you want to lower your tax liability and then give you the steps to get there. The most surefire way to keep a client’s books clean is setting up workflow automation to support you in improving the processes that impact your top line. Setting and communicating clearly defined expectations with your client will ensure all stakeholders know what to expect. An accounting engagement letter template can help set this project up for success.