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Small Business Monthly Accounting Tips

When you own a small business, it is very important to keep good accounting records.  Whether you need good records for management and planning, tax preparation or need them for banking requirements, they have many different and important purposes.  It is very common for small businesses to not have an experienced CFO or CPA on staff.

In order to help small businesses fill the gap, we have compiled a basic checklist of items the person in charge of the accounting records can use to be sure the financial statements are complete.

1.  Reconcile your bank account monthly.  Make sure the reconciled balance/balances agree to the balance sheet.

2.  Make sure your Accounts Receivables are collectible and complete. Also make sure that your detail listing total agrees to the balance on the balance sheet.  Write off the receivables that are uncollectible.

3.  Review your inventory listing or take a physical inventory count monthly. Be sure it agrees to the balance sheet.

4.  If you purchase any new fixed assets (furniture, equipment, vehicles, etc.), make sure that they are included in the fixed asset totals on the balance sheet.  If you sell any fixed assets, be sure they are properly removed from the balance sheet.  If you purchased new fixed assets with loan proceeds, be sure to record the new fixed assets as well as the corresponding loan.

5.  Review your accounts payable details.  Make sure they are all inclusive of expenses incurred, but not paid for, before the end of the month.  Then make sure the accounts payable balance on the balance sheet agrees to the detailed listing.

6.  Make sure payroll tax liabilities are properly recorded and listed on the balance sheet.

7.  When posting loan payments, be sure the principle and interest are posted according to the amortization schedule.  At month end, verify the loan balances, per the balance sheet, agree with the bank or other loan source.

8.  Now you should review the income statement. Once you have verified and balanced all of your balance sheet accounts, then your net income should be accurate. Compare income and expenses to a prior year or prior month and also to your budget.  You should look into any large discrepancies to be sure everything has been properly posted to the appropriate accounts.

This checklist is meant to be a basic guide to completing your financial statements.  Every business is going to have some different accounts or may not have all of the categories listed above.  Please contact us for additional assistance with your accounting needs.

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Personnel Profiling joins MCM

Effective July 1, 2014, Personnel Profiling, Inc. has joined the team at Mountjoy Chilton Medley, Kentucky’s largest CPA & advisory firm. With MCM, we’ll continue to offer the same top notch HR assessments, services and tools, now coupled with a greater breadth of in-demand expertise and services. You can now find the PPI main office and staff at MCM’s downtown Louisville headquarters.

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