Living An Abundant Life

Thanksgiving and the start of the holiday season is a great time of year to reflect on all that we have to be thankful for. Fun celebrations abound at this time of year allowing me to focus on spending time with friends, loved ones, colleagues and clients. It is time when I focus on my abundant life.

Abundance is a mentality in how we live our lives; interact with others and how opportunities present themselves both on a personal and professional level.

This year has been an abundant one for me.

From the joy I get at watching my grown children live their lives, experiencing things together and apart and learning from each other based on different perspectives, to growing from the opportunities that have presented themselves in running my business. Learning and adapting to change every day keeps me growing and is fun most times even with the challenge of figuring out how to stay in touch upon the loss of my cell phone for 3 days after it fell into the cleaning water bucket at puppy training class (was there really life before cell phones?).

With year-end approaching and being in business, it is a time to make sure everything is up to date and look at the results. I have also experienced abundance in working with a great team of people and delivering the results to help businesses grow through having good and meaningful financial information. Our team loves working and showing businesses how to run more efficiently and effectively with good accounting processes and reporting.

This holiday season, what are you most thankful for?

Are You REALLY Reconciling Your Bank Accounts?

Business owners frequently tell us that they are “reconciling” their bank account because they are categorizing and matching transactions downloaded into the connected bank feed.  While bank feeds have significantly reduced the amount of time a business has to spend doing data entry and allows for business to have real time information in their accounting system, it is NOT a replacement for doing formal bank reconciliations.

The bank reconciliation process requires the matching of transactions recorded in the accounting system to a bank statement received from the financial institution at the end of each month. It is the only way to ensure that all transactions recorded in the accounting system actually took place and are properly recorded.  It is a check and balance to safeguarding a business owner’s most important asset, cash.

Problems That Can Occur

Not doing formal monthly bank reconciliation could be costly to a business owner and can result in inaccurate financial statements due to any one of the following:

• Duplicate entries

• Missing transactions

• Transactions entered for the wrong amount

• Transactions entered that never took place

How This Affects Business Image

This can lead to making bad business decisions based on misinformation verses the actual results of the business.  The business image with customers and vendors could be negatively impacted if accounts receivable and accounts payable aging reports are not accurate due to misapplied receipts or payments. Any one of the above errors could also result in theft of cash.

How This Affects Taxes

No business owner wants to pay more than they really owe in taxes. If there are duplicate income amounts recorded in your accounting system you may be paying too much in income taxes. If expenses either don’t get recorded or get recorded incorrectly, you may be missing or not taking enough of a tax deduction again resulting in paying more taxes.  If audited, IRS agents will ask to see your bank statements and bank reconciliations.

How We Can Help

We guarantee that the time and cost it takes to properly reconcile your bank accounts on a monthly basis will be less than the headaches and errors that could result by not doing it at all. Our expert trainers can show you how to properly and efficiently download and reconcile your banking and credit card activity.

The Concept Of Internal Control

Internal control is a very special phrase in the accounting profession. Tactically, it’s the set of processes that help a company produce accurate data throughout the organization, follow reporting requirements and laws, and maintain consistency and accuracy in its operations. Strategically, it’s an entirely new way of thinking and doing business.

Internal control helps to reduce organizational risk. A blunt way of putting it is internal control is what you put in place to avoid mistakes, intentional or accidental, and to control accuracy and quality. It impacts every aspect of an organization.

As a small business, you’ll want to be familiar with the concept because it can help you reduce risks you might not realize you have. Here are some practical examples of good ideas that support internal control:

• When data is private and secure, provide access only to employees who need to know the data and restrict access of others. 

• Have someone check that your bank balance matches the reconciled amount in your books, and that someone should be different from the person who does the reconciliation.  This is an example of what’s called segregation of duties. 

• Lock up paper checks and use the missing check number report to make sure none of the stock could be used for nefarious purposes.

• Have employees sign in and out equipment that they take home.  This is part of asset management.

• Write and enforce a hardware and software use policy that includes items like employees should make sure their anti-virus software is active at all times, they should not bring in disks or CDs, and they should not download games or other unauthorized programs.  This protects from computer viruses and helps to avoid catastrophic network failures.

There are literally hundreds of internal control procedures that should be implemented in small businesses as they grow into larger businesses. 

Internal control is typically a big part of an audit or an attest function in accounting; it determines how many additional procedures an auditor needs to do in order to provide assurances about the reliability of the financial reports.  But it’s also just good plain common business sense to implement as many internal control processes as are cost-effective for your business to protect it at the level of risk you’re comfortable with. 

If you’d like to discuss the idea of internal control further, please feel free to reach out any time.