If I Record Expenses in my Accounting Software, Why do I Need to Reconcile the Bank Account
November 19, 2020
Reconciliation of your bank account is an important step to take, whether you own a business or are trying to keep better track of your personal spending to manage your finances to stick to a budget.
We all live busy lives, so let's face it, sometimes we forget to record a transaction in our books. Reconciling your bank account is the best way to verify all transactions get recorded.
Reconciling monthly gives you the peace of mind in knowing you have captured all of your deductions, so it’s good to form a habit to reconcile when your end-of-month bank statement is ready. If left unchecked, bookkeeping errors could multiply and carry over to your annual reports, making the process for pinning down the error's origin much more difficult and time consuming.
Reconciling your account is the first step in getting accurate, meaningful financial data to make management decisions. In addition, you can feel at ease that you have captured all your deductions for tax purposes.
Utilizing a program like QuickBooks to record your transactions and complete an electronic bank reconciliation eliminates the time spent summarizing your data. Using an accounting software and reconciling your account on a regular basis supplies you with better data to make all of your financial decisions with.
You also won’t have to summarize a year’s worth of receipts all at once, or otherwise pass off a box of receipts to your accountant to summarize for you, leading to more fees for tax preparation. Furthermore, reconciling helps prevent lost deductions for receipts that never made it to the box.
If you don't feel you have the time to reconcile your accounts, you can always outsource the task to our accounting team. Associates with Cunningham, Powell, Alexander, A.C. are always here to help. We can assist you in navigating the reconciliation process on your own or you could task us with the project. Call our Morgantown office at 304-292-9469 or our Weston office at 304-997-8377 to get started today.
It can be a real eye-opener to see a chart of exactly where most of your expenses are going. From here, you can take the first steps of deciding what to cut back on that might give you the biggest impact on your finances. It is better to assess this regularly rather than only looking at it annually, because it gives you the opportunity to better control where you want to be expenditure-wise by the end of the year.