Recording and reconciliation are the two most crucial duties in proper small company bookkeeping. Further explanations of the recording and reconciliation process are as follows.
Recording every transaction
Keep records of your sales. Traditionally, this was accomplished by entering them into a cashbook or punching them into a spreadsheet. Sales data from point-of-sale or invoicing software is increasingly being downloaded straight into the books of business owners.
Keep track of your transactions. Every business-related purchase must be documented.
If you intend to claim the expenditure as a tax deduction, you should also save the evidence of purchase. Again, you may record this information in a book or spreadsheet. Alternatively, you may automate the process so that all debits from your company bank account go into your bookkeeping software.
Whether you use cash or accrual accounting, you might record income and costs at various periods.
Reconciling every transaction
Reconciliation is routinely comparing your business records to your bank accounts to ensure that the transactions and balances match – and determining why they don’t. Bank fees, interest payments, deposits, and payments that have not yet been received in your bank accounts must frequently be accounted for.
Depending on the number of transactions in your organization, you may perform bank reconciliation daily, weekly, monthly, or less regularly. However, you will very certainly be forced to reconcile your records before submitting tax returns.
The sooner you reconcile transactions, the sooner problems may be discovered and fixed. It might be a good idea to do it daily so that the work doesn’t pile up.