How can’t reconciling bank accounts, within 30 days of receipt of the statement , be compared to throwing money away? Let me count the ways:
You might never know the bank made an error . you sometimes have up to 30 days after receipt of the statement to dispute a transaction. I’ve seen quite a couple of bank errors over the years. last , one among my clients wrote a check and therefore the bank erroneously cleared it twice . The check was $2,500.00. Ouch! Fortunately, his bookkeeper caught the error and therefore the bank refunded the cash . Unfortunately, bank employees are human, and that we all make mistakes.
You might never know someone looted your checking account .Or even worse, you would possibly determine in any case your money is gone. one among the foremost common ways criminals “cash in” on fraud is stealing money from victims’ checking accounts. it’s wise, especially in these times, to seem at your account online during the month and reconcile at the top of the month. you would like to get fraud as soon as possible and get in touch with your bank immediately. they could suggest closing the account and opening a replacement one that the criminal doesn’t have access to. There also are unscrupulous companies out there which will still debit your account monthly even after you discontinue their services. we’ve all heard of the various scams, so just confine mind, it can happen to you.
You might never know an employee made an error . Keying errors in QuickBooks are often costly for several reasons. I even have seen deposits from a loan keyed as income. If the error isn’t caught, you’ll pay income taxes on, say, a $20,000 loan you bought from the bank to get equipment. Very costly mistake. this error won’t be caught by everyone who reconciles. it’s important that either someone knowledgeable in accounting reconcile your bank statements or the business owner review monthly financial statements (at least the Profit & Loss). When owners deposit personal funds within the business to stay it afloat, QuickBooks operators might mistakenly key the deposit as income. Also causing income (and income tax) to be over stated. I even have also seen, repeatedly , where checks weren’t keyed in QuickBooks. These checks are usually tax deductible expenses. Reconciling the statement will certainly catch this error . The list goes on, but you’ve got the thought .
You might pay more for tax preparation. once you give your tax preparer incorrect QuickBooks information, you’ll probably pay more to possess it corrected than if you had paid to possess it done right within the first place. this is often not just a yearend tax consideration. For those of you who make income tax payments, those estimates are only nearly as good because the financial information they’re supported . In other words, you’ll over pay the estimate supported QuickBooks errors that overstate income or understate expenses.
Follow the steps below to timely reconcile your bank statements in QuickBooks.
1) Key all deposits, checks, ATM withdrawals, and the other transactions during the month, as they occur. For this writing we’ll assume this is often for the month of June. i counsel to not key all the transactions directly from a statement , you would possibly not detect fraud, bank errors, or employee errors. If you download the transactions from your bank, review the transactions to make sure they were recorded correctly by the bank. Or, again, you would possibly not detect fraud, bank errors or employee errors. Also confirm that they were assigned to the right accounts in QuickBooks.
2) Now for the timely part, during the primary week or two of July, reconcile June’s statement in QuickBooks. That is, attend Banking, Reconcile, and choose the statement you’re close to reconcile.
3) Compare the statement to the reconciliation screen and click on each transaction that appears on the statement . If all goes well, the Difference (in the lower right corner) are going to be zero. you’ll then click the Reconcile Now button and you’ve got “timely reconciled your bank statements in QuickBooks!
4) Review all the uncleared Checks and Payments and Deposits and Other Credits still within the QuickBooks Bank Reconciliation screen. Every item during this screen is uncleared after the reconciliation is complete. (Tip: you want to enter an ending balance to urge back to the reconciliation screen, just put any number in so you’ll review uncleared transactions). Are there old uncleared items? The deposits should clear as soon as you’re taking them to the bank. If there are old deposits still showing on this screen. for instance , if a deposit was made on June 7th and it’s still showing as “uncleared” in QuickBooks after the June statement is reconciled, there’s a drag . Research it, that is, answer the question: Why has that deposit not cleared? Maybe it had been keyed in QuickBooks twice and cleared once. Also, if checks are still “uncleared” once they were written months ago, this might signify a drag in need of research. Or a call to the check recipient.