How Bank Reconciliation Can Help Businesses in 2020
Do your business’ finances align with what is reflected in your bank accounts? The question is, when was the last time you checked it? This where bank reconciliation comes into the picture.
If you’re like most business owners, you’ve probably haven’t paid so much attention to this aspect until today. The truth is that knowing about your finances is a vital part of business account management because the bank statements serve as a valuable source for your business’s daily transactions.
Bank reconciliation is a way for entrepreneurs or accountants to track and ensure the company’s financial records are up-to-date and accurate. This involves comparing one’s business accounts against the corresponding bank statements. From there, the numbers will be checked, which is also helpful to identify any discrepancies that must be resolved as soon as possible.
Here are the advantages of a bank reconciliation:
1. It Ensures Data Accuracy
Your business’ finances are crucial to sustainability and growth, and it’s only right for you to ensure that every transaction, whether in and out, reflects on your bank statements. With bank reconciliation, you can verify the accuracy of your data that will help you sort out your books better.
2. It Identifies Payment Irregularities
Bookkeeping isn’t error-free, which is why it’s crucial to check if there are any payment irregularities, which is where bank reconciliation becomes extremely helpful. Doing so will not only point you to any unseen abnormalities, but it can also help prevent someone who is trying to defraud the company before you become bankrupt.
3. It Tracks Business Profitability
Similar to how you can spot tax opportunities, you can assign expenses to jobs to see how much you’ve earned. You’ll find that it’s easier to track finances and report them when you go along a bank reconciliation process so that you can determine the profits of your business.
4. It Assesses The Business’s Current State
When it comes to assessing your current business state, it’s not just about going with your gut. You also need to see accurate data to determine the financial position of your company. With hard-data that you can get from the bank reconciliation, it will help you stay on top of things that will drive better business performance.
5. It Catches Opportunities For Tax Breaks
Tax breaks are like a slice of heaven for business owners, and they are usually grabbed immediately. The thing is that they’re not easy to spot, which is where bank reconciliation becomes helpful. With this process, you can save time because you’ll be able to identify which expenses are tax-deductible.
6. It Prepares For Tax Season Efficiently
As we all know, tax season can get stressful. A considerable part of the process is in creating a fully reconciled record of your business’s spendings and income throughout the year, and that’s why you need to do a bank reconciliation process.
Your finances are crucial, and you need to keep a close eye on it to ensure that the money that comes in and out is what you expect. Aside from having an excellent bookkeeper by your side, a bank reconciliation method will save you a huge amount of time (and even money) as it will help you manage your finances more efficiently.
Remember, there are more advantages to this process, as discussed above. This also means that you will be able to make the most out of it with a professional accountant with you.
Do you need a reliable business accountant in Gold Coast, QLD? We can help you here at New Wave Accounting, as our accountants will help you minimise tax and maximise profits. Contact us today to book a free 30-minute strategy session!