Bookkeeping FAQs
Our tax experts recommend using Xero due to its robust features and ease of use. If Shared Economy Tax manages your books, we can even get you a discounted subscription rate.
Xero is our recommendation, but QuickBooks comes in at a close second. If you’d like to learn more about how these applications compare, check out our blog post on Quickbooks vs Xero.
If you’re a single-member LLC or a sole-proprietor, you might be able to get away with using free software like Wave. Wave makes it money on invoicing and other services, so they offer free accounting software to bring growing businesses into their product ecosystem. Wave has a lot of powerful features, but we don’t recommend it for serious bookkeeping, primarily because of its lack of an audit trail feature.
Bank reconciliations identify discrepancies between your bank account’s book balance, like the balance listed your accounting software, and the real-world balance of your bank account. You can ensure that your working with accurate data by comparing transactions between your accounting software and your bank.
The process can be a bit tedious, but software is getting better at tackling the problem. We recommend businesses get in the habit of conducting monthly bank reconciliations. At minimum, do at least one every tax year, preferably prior to handing off your annual financials to your tax preparer.
You will receive management reports that include an Income Statement, Balance Sheet and Statement of Cash Flows. These are the three main financial statements that are integral for business owners to review, but there are ways to view your Profit and Loss by Business Segments. We also have a reporting set that includes KPI’s in our higher tier packages.
Every business should have a dedicated business banking accounts, regardless of their structure. There are many great banks to choose from, but we’re currently recommending Relay Financial for our clients.
Our firm doesn’t offer live bookkeeping tutorials at this time, but there are lots of free classes and resources available online that can teach you the fundamentals.
The number one bookkeeping platform we recommend for clients is Xero. Xero makes bookkeeping extremely simple and intuitive, so even beginners can use the platform with ease.
This handy guide from Xero explains getting started with bookkeeping, bank reconciliations, setting up a chart of accounts, and much more. It’s a great resource that we recommend for growing companies that are exploring a bookkeeping upgrade.
Our tax pros recommend you have at least one bank account and one credit card account for every company you operate. Furthermore, every card or bank account associated with an entity, like an LLC or S-Corp, should be registered under its EIN, or Employer Identification Number.
Some business owners opt to have many different accounts with specialized purposes, but this isn’t necessary for most. In fact, you books can quickly become complicated if you go overboard. However, there are many good reasons to open dedicated accounts for payroll and other purposes. Ultimately, the correct answer to this question will depend on your business needs and many other factors.
It depends on several factors. If you have a large numbers of reconciliation accounts and monthly transactions, it could prolong the onboarding process. Our team will keep you updated on their progress, and they’ll reach out if they have any specific questions.
There’s no need to fill up giant filing cabinets with multiple years of documents anymore, thanks to game-changing advances in cloud storage and document management software.
Our clients have access to a custom Canopy board where they can access their tax returns and other pertinent firm correspondence, along with back-up copies of all the documents they’ve uploaded for their taxes.
This depository can be very useful when you need to track down an obscure tax document at the last second, and it could be your saving grace if you misplace an important document.
Clients can access their Canopy dash using this link.
If you’re not a client, smaller businesses typically find that standard cloud storage platforms like Google Drive, Microsoft Live, Dropbox, and Apple iCloud are more than sufficient for their needs. However, larger organizations may find value in upgrading to a more specialized, enterprise-graded document management solution.
If you identify a discrepancy on your bank statement, it’s important to address it promptly and methodically. Here are the steps you should take:
Gather Documentation
Collect all relevant financial records, including receipts, transaction records, and invoices. These documents will be crucial for verifying the accuracy of your bank statement.
Identify the Specific Discrepancy
Clearly pinpoint the transaction or entry that doesn’t match your records. It could be an unrecognized charge, a missing deposit, or an incorrect transaction amount.
Reconcile with Personal Records
Cross-check the discrepancy against your own financial tracking system. Sometimes, discrepancies arise from delayed postings or unrecorded transactions in your personal records.
Contact Your Bank
If the discrepancy cannot be resolved through personal reconciliation, reach out to your bank. Provide them with specific details about the discrepancy and ask for clarification or correction. It’s beneficial to do this as soon as possible, as banks typically have a time limit for reporting errors.
Follow Up on the Investigation
Banks usually investigate discrepancies, which may take some time. Ensure you follow up regularly and keep a record of all communications with the bank regarding this issue.
Adjust Your Records as Needed:
Depending on the outcome of the bank’s investigation, you may need to adjust your financial records to reflect the correct information.
Monitor Your Account:
After resolving the discrepancy, continue to monitor your bank statements closely for a while to ensure that your account reflects accurate transactions.
Consult with Your Tax Advisor:
Discrepancies between your books and your bank statements can create chaos for your books. Bring the situation to your bookkeeper to determine whether there’s a risk of a significant tax impact, and what steps you can take to resolve the discrepancy.
Remember, prompt action and meticulous record keeping is key to effectively combating & resolving discrepancies.