Small Business Bookkeeping

To guarantee the accuracy of your accounting records, your bank and credit card accounts will be regularly reconciled. Account Reconciliation validates data from one source to another to ensure correctness and completeness for peace of mind. The greatest way to identify errors or omissions, as well as theft or fraud, is through reconciliations, particularly those involving bank and credit card transactions. To ensure quick identification and corrective action, these should be carried out on a monthly basis. Your monthly account reconciliation can notify you of:

• lost cheques, deposits, and unauthorized wire transactions
• errors, theft or fraud within that account
• excess/unjustified bank service and/or interest charges
• cash flow issues that may affect normal operations
• errors in accounts receivable and/or accounts payable

Financial Statements 

Financial statements are a fantastic resource for business analysis. Financial statements can assist you in identifying and analyzing trends inside your business so you can decide whether or not you are on the correct track when used consistently. Bankers and other lenders use them externally to assess a company's level of risk before approving lines of credit or loans and the conditions attached to them. Financial statements will allow you to:

• if you are doing better than the previous month, quarter or year
• if your company has improved, remained stable, or declined
• If you need to make adjustments to your plan
• if you are meeting bank imposed restrictions and covenants
• if you have to start putting money aside to improve your working capital or meet tax obligations

General financial statements provide you with a way to set attainable targets for improvement, to monitor your company's progress and to provide measurable results.

Income Statements 

By deducting expenses from revenues, an income statement, also called a profit & loss statement, determines the profitability (net income/loss) of a business for a given time period.

Using an income statement, you can:

• identify areas in your company that need improvement (i.e.: warranty costs, cost of goods sold) and/or areas that are doing well (i.e.: certain products/services that are selling well)
• compare actual to budgeted amounts
• determine unexpected expenditures (i.e.: maintenance costs)
• determine the efficiency of your operations and track your profit margins
• determine your tax liability
• calculate your *net income for the period

*Net income is a calculated number, and how a business’ transactions are recorded greatly impacts this number.

Balance Sheets 

A balance sheet provides you with a quick overview of the financial situation of your company at a certain point in time. It provides information about your company's assets, liabilities, and equity.

A balance sheet is useful for: 

• Determine the financial strength of your business. (Are you are able to meet your current obligations such as paying bills, payroll run, loan payments, and government remittances on time?)
• Determine if your internal processes are working for you or if you have to make changes. (Is your accounts receivable collection period getting longer? Can you handle the normal ebbs and flows of revenues and expenses?)
• Qualify for better credit or loan terms saving you money
• Determine if taking advantage of a sudden opportunity is the right move

Statement of Cash Flows

A statement of cash flow details the actual cash flow through the business over a given period of time. It splits the cash into three distinct categories: financing, investments, and cash flow from operations. You can see where your money is coming from and going once the non-cash items and their effects on net income have been eliminated. The cash flow statement, when combined with the balance sheet and income statement, assists you in:

• Determine the quality of net income reported on the financial statement. (You are generating real cash, not accounting profit as the income statement calculates.)
• Determine the actual cash position of the company to make decisions regarding expanding, investing in new projects and/or making dividend payments to shareholders
• Determine how much money you can put to work for you without affecting normal operations
• Know that your company is generating cash from its normal business rather than investing and financing options

General Ledger

 The general ledger is the core of your company’s financial records and is the foundation upon which all your financial information is derived. Inaccurate and incomplete postings transfer to the financial statements and other reports used to run and make decisions about your business. Poor data results in inaccurate information and bad business decisions. Reviewing your general ledger each month allows us to find discrepancies, errors, and omissions, giving you the right information, at the right time for the right decision.