A Complete Checklist For Accurate Bookkeeping

No matter what size your business is, bookkeeping is integral to its success. Bookkeeping is the process of organizing and maintaining financial data and transactions in an effort to help your business run efficiently and smoothly.

However, accurate bookkeeping requires proper time and effort, which can become overwhelming when you are consumed by daily operations. For this reason, the experts at Your Ledger Pro have created a handy checklist on how you can handle bookkeeping tasks by yourself. Follow this checklist accurately so that you can do your books like a pro.

1. Bank statement reconciliation
All bank account balances on a company’s balance sheet should be reconciled to their corresponding bank statements. Hopefully, your main checking account is being reconciled monthly, but perhaps your savings or investment accounts are not reconciled as often.

2. PayPal reconciliation
It’s easy to forget your PayPal account in the list of reconciliations to complete. It is effectively another cash account like your bank, and we list it here separately for emphasis. If you’re using your PayPal account for both business and personal, get two accounts, and your accounting will be less expensive and more straightforward.

3. Petty cash reconciliation
Does your business have a petty cash account? If so, complete the reconciliation on the last day of your fiscal year. That will allow you to record all outstanding expenditures and replenish the account to its balance sheet amount.

4. Credit card reconciliation
If you have credit card debt in your business, each credit card statement balance should be reconciled to the amount on your balance sheet report.

If you are using your credit card for both personal and business, get another credit card and use one card for personal and another for business. This will greatly cut down your accounting expenses and keep things easier to track.

5. Loan reconciliation
If your company has any loans, the loan balance on your balance sheet should match the loan balance on the bank or lender statement. When payments are made, they include both principal and interest, which need to be deposited into separate accounts. Often, this is not recorded correctly and can be corrected at year-end.

6. Interest income and expense
It’s a good idea to reconcile the balances in your interest income and expense accounts with the interest you received and paid from your financial institution reports.

7. Accounts receivable
If you invoice clients and have unpaid invoices, you will have a balance in Accounts Receivable. The total of this account should add up to all the unpaid customer invoices you have.

You may need to make adjustments so that the balance is accurate. For example, some invoices may need to be voided or adjusted if the amount is incorrect.

8. Uncollectible invoices
If any of the unpaid invoices in your Accounts Receivable account is old and might not be collectible, they can be written off or sent to a collection agency.

9. Inventory
If your business stores inventory or items for sale, then the cost of these items needs to be reflected on your balance sheet. The reconciliation counts physical inventory and matches that to the inventory balance on your books.

Your inventory may be more involved if you manufacture goods for sale. You will have components such as raw materials and work-in-process in addition to finished goods.

The cost of each item is determined by the accounting method your business has adopted. Once the physical count is complete, an adjusting entry can be made to adjust the book balance.

10. Accounts payable
If you owe vendors money for work performed or items purchased, you will have a balance in Accounts Payable. The total of this account should add up to all of the unpaid bills you have.

You may need to adjust the balance for accuracy. For example, some bills may need to be voided or adjusted if the amount is incorrect.

11. Sales tax liability
If you collect sales tax when you sell your products or services and some of it is unpaid to the state or local agency, you should have an amount recorded in your sales tax liability account. It should be adjusted to the exact amount due. The amount will be determined by your payment schedule. It could be a year’s worth, a quarter’s worth, a month’s worth, or some other amount.

12. Meals and entertainment
One of the first things your tax accountant will be asking you for is the amount you spent on meals and entertainment. It’s helpful to have those items in separate accounts with no other expenses so the amounts can be determined quickly.

13. Documentation for invoices, bills, and receipts
If you are ever audited, you’ll need proof of what you spent on your business. Year-end is a good time to make sure your paperwork is in order and either filed in a safe place or scanned in and saved in the cloud.

14. Fixed assets
Your balance sheet should reflect the long-term assets your company owns, such as vehicles, buildings, land, machinery, furniture, equipment, computers, and the like. Each of these items should be listed on your fixed assets schedule, and the balance should reflect the correct value of these items.

15. Depreciation
Certain fixed assets can be depreciated, which means a portion of the cost is expensed each year. A company should have a current depreciation schedule, and that should be updated each year or more often.

An adjusting entry should be made to reflect depreciation for the current year or period if it’s recorded more often.

A schedule should also be kept of differences between book and tax records so that it’s easier to complete the corporate tax return.

16. Wages reconciliation
Expense accounts that are payroll-related should be reconciled with the sum of the payroll reported on the IRS Form 941s in all four quarters. These accounts include wages and payroll taxes paid by the employer.

17. W-2s
Your payroll system should produce the W-2s for your employees and the W-3 submittal automatically, but it’s a wise idea to double-check that they are accurate. You may also have state and local reporting requirements at year-end.

The totals on the W-3 should reconcile to the corresponding payroll expense accounts.

18. 1099s
Your company may need to generate and send 1099s to any contractor you paid over $600 for the year that was not paid through credit cards or a payment vendor like PayPal.

19. Close or lock the books
Now that everything is tied with a bow, no more entries should be recorded that have a date of last year, or your balances will change and no longer reconcile with all the hard work you’ve done so far. Some accounting systems allow you to close the books by preventing new entries; this is called locking or closing, so use this feature if you have it.

20. Tax projections and plan
It’s a really good idea to set up a tax projection or planning meeting with your tax professional well ahead of December 31st. This is in case there are any moves you can make to save on taxes. This should include determining if you have deposited enough of your tax liability so that you won’t owe a large amount come tax time.

You can also get a schedule of tax payments that need to be made in the coming year for the following year’s taxes.

If you have concerns about bookkeeping or are looking for a bookkeeper in College Place, Washington, then reach out to the experts at Your Ledger Pro. We have over twenty years of experience in bookkeeping and accounting. Working with various individuals and companies in the past has enabled us to excel at solving our clients’ complex needs.

Our services include online bookkeeping, payroll, tax preparation, and Quickbooks Online. We serve clients across College Place, Walla Walla, Benton City, Richland, Kennewick, Connell, Dayton, Washington, Hermiston, Pendleton, Oregon, and the surrounding areas.

To learn more about our services, please click here. Have a question? We’d love to hear from you. Contact us here.