Even if you hire someone to do your accounting and bookkeeping, there are a number of items that you should do periodically. Many small businesses have suffered serious losses when the owner didn't check the books regularly and the trusted bookkeeper pocketed a substantial amount of the business earnings. The following checklist will help you keep in touch with your business and, perhaps, even prevent serious financial problems.
Compare Actual Income and Expenses to the Budgeted Amounts
Every month you should compare your income and expenses to your
budget.
This review is a great way to learn what's working and what's not working with your business.
The goal is for you to have a thorough knowledge of what is happening and to
be aware of anything unexpected that is happening so that you can
adjust your actions in a timely manner.
Scan the Check Register
Periodically you should take a look at the check register just to make certain all
the payees are familiar to you. Multiple checks written around the same time to the
same vendor is one indication that funds are being diverted. The check register can
also give you a sense of the flow of your funds.
Review the Bank Reconciliation
Checking the bank reconciliation is important, particularly if you have one person doing all
the bookkeeping: writing checks, posting entries, and preparing financials. Look for
any adjustments to the bank accounts and stale items.
Review Statements from Vendors
Take the time occasionally to open the mail and look at statements from vendors.
You want to make certain that your business is in good standing with vendors. Overdue
invoices that you were not aware of might be an indication
that your bookkeeper is not handling your payments appropriately.
Review the Payroll Register and Hand Out the Paychecks
Not only do you keep on top of who is being paid what, but it
give you an opportunity for personal interaction with each of your
employees. Done well, it can be a great morale booster. Also, it can
help you keep an eye out for padding the payroll which can be a problem
in industries where it is common for the crew to go straight to
the jobsite and perhaps not come into regular contact with
the owner. Construction and cleaning services are businesses that
particularly need to watch for payroll padding because owners frequently do
not have constant oversight of their employees.
Review your Accounts Receivable and Aging Accounts
You need to know if you have any slow paying customers. A periodic review
also will uncover any misapplication of customer payments.
Take a Physical Inventory.
Many small businesses have inadequate inventory records, so if you have a large amount
of inventory or a high volume business, you should work with your accountant to set up
some type of perpetual inventory system. There are also some excellent
software packages available for the small business
that can make this process relatively painless. Once you have a system in place,
you should take a physical inventory at least once a year, comparing
the actual goods on hand to the inventory records.
