As a business owner, keeping track of what’s being spent so that it matches with bank and accounting records can be an overwhelming process. The actual term is called bank reconciliation and, unfortunately, it tends not to get the important attention it deserves. Luckily, Simplified Tax in Sparta, WI, specializes in providing professional accounting services to oversee and maintain financial records, including critical cash flow monitoring.

Doing regular bank reconciliations starts with a basic understanding of how it works. Each financial transaction made is checked between the accounting record and bank statement to ensure all withdrawals match. With each cash transaction or deduction accounted for, the balance in the accounting record should be zero. If there is a discrepancy, bank reconciliation needs to be done again to catch and correct any mistakes.

Why is it important do routine bank reconciliations? For one, if invoices and expenses paid out or received are counted twice, it completely throws off the figures being checked. This is a common mistake with transactions, such as neglecting to match a non-posted check with the bill it’s supposed to pay for or a deposit with an invoice. One forgotten match can grow into a larger financial discrepancy, which won’t show an accurate tabulation of the overall income statement.

Another reason why bank reconciliations are critical is related to taxes. If the accounting service isn’t performed on a regular basis – monthly is ideal – or if mistakes aren’t accounted for and corrected, wrong income reporting can affect the amount of business or income taxes you may end up paying. One of the dangers is you could pay more or less than what’s actually owed.

The tax preparation team at Simplified Tax understands how busy business owners are. That’s why the firm offers expert accounting services designed to keep a close watch on deposits, withdrawals, invoices, and other financial transactions. In fact, its computerized accounting service handles all aspects of tracking, including bank reconciliation. To learn more about how they can help your business, call (608) 269-2633 today. Visit the website for extensive information on the available tax and accounting services.