Balancing a checkbook can seem overwhelming, but it's a necessary process if you want your business to succeed. It doesn't have to be daunting! By giving yourself a few basic rules to follow, you can make the entire experience a little less stressful.
I know what you're thinking. You're thinking "Why do I have to balance my checkbook? Not everyone has to do this, right? The government doesn't insist that we do this, so why should I?" Well, balancing your checkbook provides countless benefits, and therefore is very much recommended. Below are just a FEW benefits you can expect by keeping your checkbook balanced:
- You'll be able to spot financial mistakes and fraudulent charges
- Unnecessary fees will become clear
- Tracking your spending will allow you to form clearer budgets and sales goals
- You can avoid bouncing checks and having to pay overdraft fees
“How can you fix the problem if you don't know what it is?”
HOW TO BALANCE YOUR CHECKBOOK
Let's take a look at a basic check register.
As you can see, the columns will allow you to keep a clear picture of you account and where your money is going.
If you've never balanced a checkbook before and you wanted to start now, this is how you would do it.
First: find the bank's current balance and the bank's balance on the first of the current month. Save these figures for later.
Second: begin tracking all of your expenses and payments and recording them into the check register. Start on the first day of the current month and record everything up until the last transaction on the current day.
Third: record the bank's current balance and the balance from the beginning of the month (from step 1) into the 'balance' column of the first and the last line of your check register.
Finally: take the bank's starting balance, add all of the credits and subtract all of the debits to that amount. The number you come up with should match the balance in the final column
Helpful Hints
Balancing the books doesn't have to be a beast of a job. Follow these tips and you'll find that it's a rewarding experience
Balance as you go : keep your register close by so that you can update it daily. If you make a conscious effort to keep track of your transactions, it will save you time later and will help you keep track at how much money you have
Keep track of automatic payments : try to coordinate automatic payments and direct deposits to line up at the beginning of the month. If you are unable to feasibly do this, at least record them at the beginning of the month. That way, you'll always have a sense of where your bank account will be when those payments clear the bank
Take advantage of digital solutions : online banking services allow you to accomplish more in much less time. If your bank offers online banking, you can retrieve your bank account statements every month. Let them do the work of recording and keeping track of the payments, and you can simply go over and review them. You still get a clear picture of the activity, and will still be able to spot incredulities and fraudulent charges. Some banks even offer you automatic checking account alerts. This means they will alert you whenever your account is below a certain amount, or even if an unusual charge has come through.
Get help : the assistance of a certified bookkeeper could help tremendously. If you have a complicated situation, a lot of accounts, or this whole process just seems daunting, give us a call! Reap all of the benefits without having to do the work.
Keep tracking, my friends. And let's build a better tomorrow!
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