Accounting is one of those terms that has a pretty bad reputation among businesses, and with good reason. It’s boring, tedious, complicated, and difficult to understand. Many businesses try to avoid it as long as possible, but that usually backfires on them in the end when they’re forced to stumble through it – often with bad results.
Accounting isn’t something you need for just a few months out of the year. It’s something you need every month. While it can be daunting for some people, it’s important to know what goes into monthly accounting to understand it better.
Monthly Accounting Explained
Monthly accounting is the process of recording, classifying, and summarizing financial transactions. This includes all income and expenses, as well as assets and liabilities.
In order to do monthly accounting effectively, you need to have a good understanding of accounts payable (what money your business owes), account receivable (what money your business is owed), bank reconciliation (comparing your bank statement with your records to ensure accuracy), and credit card reconciliation (doing the same thing for credit cards).
How It Works
When you’re doing monthly accounting, there are three main steps you need to take: recording transactions, classifying them, and summarizing them.
First, you need to record all the financial transactions that took place over the course of the month. This includes income from sales, expenses for things like rent and utilities, payments made to suppliers and employees, as well as any other money that moved in or out of your business during the month.
Then, you need to classify each transaction according to its type. For example, income might be classified as revenue from sales or interest earned on investments. Expenses could be classified as office supplies or advertising expenses.
Lastly, you need to summarize all the transactions. This includes creating a balance sheet, which shows your business’s assets, liabilities, and net worth at any given point in time, as well as a profit and loss statement, which shows how much money your business made or lost.
Accounts Payable
Accounts payable is the money owed by your business to other businesses or individuals. It can come in the form of loans, credit card bills, lines of credit, or any other type of debt that needs to be paid off eventually. Paying off these debts is always a good thing because it means less liability for you if something goes wrong with creditors later on down the road.
Most businesses try not to let accounts payable fall too far behind because they know it could come back to haunt them in the future. Sometimes, this does happen due to unexpected circumstances like sudden drops in revenue stream during certain months or even years.
The best way to manage accounts payable is through monthly accounting. This means recording all transactions that come in and out of your business so you can keep track of how much money has been paid off each month, as well as what’s still left due on these debts.
Accounts Receivable
Accounts receivable are the opposite of debts owed by your business to other businesses or individuals – they are monies owed back from those same entities! For example, Company A provides a service to another business or individual. A bill for those services is sent to the receiving party. So then the company awaiting payment, records the bill into their accounts.
Monthly accounting helps keep track of all invoices that have yet to be paid to your company, both from customers and suppliers. This is important for two reasons: (a) to ensure that you’re not missing any payments that need to be made, and (b) to make sure that your company’s cash flow remains healthy.
Bank and Credit Card Reconciliation
Bank reconciliation is a process where you compare your bank account records with those on paper. For example, if your checks show up as $100, but there’s only $90 in cash at hand, then that means something must have gone wrong somewhere along the line. However, this can be solved by simply recording transactions from one source into another so that all information matches up perfectly again (and stays like).
The best way to manage accounts receivable is through monthly accounting so that you can keep track of how much money has been paid off each month.
Credit Card Reconciliation
Many people use credit cards to make purchases and pay bills. But what happens when those same cards show up on your credit report as past due? This could mean that some charges are going through without your knowledge, leading to fraud or other problems if left unchecked! The best way to manage accounts receivable is through monthly accounting so that you can keep track of how much money has been paid off each month.
QuickBooks Set-Up
What It Is and How to Manage It? Quickbooks set-up includes creating a chart of accounts, setting up inventory items, entering opening balances from previous years (if applicable), designating bank accounts as well as a payment method for each one so all transactions will go where they need to automatically. This is probably the most important part of QuickBooks and is what helps keep everything organized.
QuickBooks Cleanup
What It Is and How to Manage It? The Quickbooks cleanup process is exactly what it sounds like – getting your QuickBooks account back in order by deleting unnecessary files, reconciling accounts, fixing any errors that might have popped up along the way, etc. This can be a time-consuming task, but it is worth it to have a clean and accurate financial record for your business.
Why Do It? If you haven’t done a clean-up in some time, your QuickBooks file might be full of errors and unnecessary files that are wasting space on your computer or cloud storage, taking up valuable processing power from other programs running simultaneously (like antivirus software), and slowing down the performance of QuickBooks itself.
Additionally, if there has been any human error introduced into these various accounts during entry—and this is common—then reconciling all accounts will help to ensure everything matches properly when it comes time for filing taxes at year’s end.
Client Accounting Services
Client accounting services provide monthly bookkeeping and financial statements for companies. CAS also helps with taxes, payroll, invoicing customers, paying bills to vendors or suppliers on behalf of the client company (accounts payable), collecting payment from customers (accounts receivable), and other tasks related to running a business such as:
Monthly Bookkeeping
Bookkeeping involves recording all transactions in a journal and then posting these entries into general ledger accounts as they occur throughout each month. Monthly bookkeeping services will provide you with accurate information about your cash flow, so you know how much money is coming in vs. going out at any given time – this way, there won’t be any surprises later down the road!
A good accountant will always keep you in the loop about your business’s financial situation, and monthly bookkeeping is the best way to make sure that happens.
Payroll Processing
Payroll Processing Services involve managing employee payroll by calculating their net pay, taxes withheld, and deductions for each period of time. This service is usually done on a weekly basis but can also be handled monthly or biweekly depending on the company’s needs.
Payroll Processing Services will provide you with accurate information about your employees’ paychecks, tax withholdings from them every paycheck (known as “net pay”), which helps keep everyone in compliance with government regulations while making sure they get what they’re owed at all times.
401k Services
401k services include the set-up and administration of company retirement plans. This type of retirement plan allows employees to save money for their retirement. The employer matches a certain percentage of the team member’s contributions, making it a very beneficial plan for both the team member and the company.
CFO Services
CFO services are for businesses looking for more long-term financial planning and advice. A CFO is a Chief Financial Officer, and this position typically oversees all company’s financial operations. If you’re not sure what your business’s long-term financial goals are, or if you need help reaching them, then CFO services might be right for you.
There are various accounting services available to small businesses, so it’s important to understand what each one entails to make an informed decision about which ones are best suited for your specific needs. By taking the time to research and understand these concepts, you’ll be on your way to making sound financial decisions for your company!
Audits and Tax Return Preparation
Audits are an important part of running a business. They ensure that all information is accurate, complete, and up-to-date, so no mistakes occur when filing taxes or other documents with the government. Auditors can help you find errors before they become too big of a problem!
Attestation
Attestation is a service that verifies the accuracy and completeness of financial statements. This is often required by banks, investors, or other lending institutions before providing funding to a business.
Trust The Professionals At Nesso Group
Having someone you can trust to take care of all your accounting needs is the first step in building a successful business. Nesso Accounting is committed to helping you achieve your accounting goals.
At Nesso Group, we provide client accounting services, tax planning, business advisory, outsourced CFO services, strategic planning, amongst others. Don’t hesitate to reach out now to help you with all your needs.
