You know those statements you get every month? The ones you sometimes glace at or quickly file away or even worse, throw away? They are often looked at as secondary, however, they are a very key component of running your business!

What is a Reconciliation?

A bank or credit card reconciliation is key to ensure you are picking up all the transactions which relate to the company. This should be incorporated into your monthly bookkeeping routine.

In order to correctly reconcile, depending on the bookkeeping software you are using, you need to ensure all transactions in the statement match the bookkeeping entries. Make sure each month you are going line by line to pick up every transaction recorded in the bank or credit card account (even if it is personal in nature...it needs to be recorded).

Accountant tip - A way to make this easier for the company is to make sure you have a separate bank account and credit card for the business.

Why Bother?

When an accountant is preparing the year end, especially if you are an incorporated business, you must reconcile the balance sheet each year. Included on the balance sheet is any assets and liabilities, which involves the credit card balance payable and the bank balance.

In order for the accountant to close the year end, the amounts reported in the company must match the bank statement or the credit card statement at the year end date.

Additionally, for the company, this is a good way to discover any mistakes made in the bookkeeping.