Cover Your Financial Butt Checklist

Transcription

1 Cover Your Financial Butt Checklist

2 No more wondering or misunderstandings. The Cover Your Financial Butt Checklist is the bookkeeping process your financial team must provide for you. Use this handy checklist to find the holes in your system. Recordkeeping Chores Here at ADI we recommend that you do these daily and at the very least weekly: Open and process mail received: Division of duty and fraud can happen at this first stage. It is recommended that the owner open the mail before your financial team processes it. Suggest a folder or inbox to keep items neatly organized and in one place for processing Process deposit: ADI suggest making copies or scans of the checks; division of duties recommends that a separate team member or business owner take the deposit to the bank if not using remote deposit technology; plus someone else needs to verify the deposit Record accounting activity: Deposits, checks written, credit card activity; use your accounting tool to automatically do a read-only pull of the banking activity daily and then verify it to actual activity Soft reconcile bank account: You will want to verify activity matches bank; yes, even if the read-only pull is active. Receipt processing: Hard copy file or scan your receipts for paperless storage; BEST practice includes: Notes on purpose of receipt and approval Meal/Entertainment needs to indicate who else was present and purpose FYI receipts are necessary for IRS Audit; IRS will NOT just use your bank or credit card statements as proof of expense accountingdepartmentinc.com info@accountingdepartmentinc.com

3 Bookkeeping Items Ideal is weekly or minimum monthly Vendor bill payment process: We recommend using Bill.com as the tool because it allows for division of duty; approval; paperless storage and payments are paid from 3rd party account or ACH direct to vendor If not using Bill.com recommend bill approval; processing; payment issued and signed by reviewer; mailed; and file paperwork as needed Request W9 for all new vendors Vendor statement process: Statements are sent because the vendor records indicate that you, the business, have not paid; it is up to your team to verify, rectify and respond. It also is a good indication to you if the payments are being sent. Client collections: Invoice Sherpa is an automated reminder service that can easily be added to your invoicing process and will send clients reminders so they don t pay late. If it is late, then further collection steps can be taken. Regular review and follow-up with clients is required to get paid on time or change your payment processes to be paid by ACH or credit card to guarantee service. Make it super easy for clients to pay you: Intuit Payment Network allows you to receive payment via ACH or credit card and you only pay for what you use. Set-up a PayPal account, no fee unless you use it as well. We also like Bill.com for collecting payments. Why not use ACH as your preferred payment method and eliminate the check is in the mail excuse? Client invoicing: Who says you can only bill once a month? If you can bill weekly, why not? It creates a more consistent cash flow. Cash flow planning: Ignorance is not bliss when it comes to cash flow. Take a proactive planning approach and choose to create what you need accountingdepartmentinc.com info@accountingdepartmentinc.com

4 Accounting Items Monthly, no exception and these are all MUST DO items Reconcile ALL bank related accounts: Checking Savings Credit card Loans Review all Balance Sheet accounts and verify knowledge of balances: Your financial team should always be able to share knowledge and proof of what makes up each Balance Sheet account. That is their job. No excuse. Review Accounts Receivable (A/R) aging report Review Accounts Payable (A/P) aging report Prepare monthly management reports Once you get your reports, you should be reviewing them with your financial team or board of directors. These monthly reports give you a guage of how your business is doing and the critical information you need to make proactive business decisions. Review your reports: Now take action and just filing them in a drawer doesn t count! Here s what you need to be aware of when reviewing your reports: Review Your Balance Sheet: ADI suggests running this report comparing actual to prior period. Know why the accounts changed from prior period; ask for detail, as needed. This report represents what the business owns (Assets) and what they owe (Liabilities) and what your Equity is (net profit/loss and initial investment AKA value in business). The balance sheet is your scorecard for the business as of a particular date. Review Your Profit & Loss report: I find a month to month comparison for the period to date is extremely beneficial to see averages, recurring and holes accountingdepartmentinc.com info@accountingdepartmentinc.com

5 Accounting Items Monthly, no exception and these are all MUST DO items Review Your Budget to Actual: Where are you at today compared to your plan? What areas need to be adjusted? What areas do you need to step it up? Aged A/R and A/P reports: Does it seem accurate? Why are any of these amounts showing in 90 days or older? What is the plan to resolve it? Payroll reports (as needed) for the period: Do a quick review of who was paid and for how much EXTRA Credit: Cash Flow Projection for next 30, 60 and 90 days - knowing these number is essential to running your business and better decision making. ADI Suggested Best Practices Payroll wasn t mentioned above because it is less common for bookkeepers to have the skill set to process payroll manually. Yes, most accounting tools includes payroll processing but if the bookkeeper doesn t have a strong book knowledge of the process, you the business owner could be taking an unnecessary risk. We recommend using a payroll service or outsourced accounting team. accountingdepartmentinc.com info@accountingdepartmentinc.com

6 Accounting Items Accounting Items Monthly, no exception and these are all MUST DO items Year-End Checklist: Payroll Reports due quarterly and annually 1099s must mail to vendors by 1/31; to IRS by end of February; some states, like Oregon require electronic filing Personal Property Returns due 3/1 Listing of the equipment and furniture used in your business. While this is an informational return, sometimes it is preferred if your tax professional assists you with this especially if there is leased equipment involved Tax work papers and info to your tax professionals depends on your tax entity but a good rule of thumb is by 2/15; check with your tax professional if a later date will be better Minimum business taxes due 3/15 or 4/15 work with your tax professional to create a list of potential business taxes that will be paid annually and the due date Other Important Items: Tax estimate payments These are due Jan 15th, Apr 15th, Jun 15th and Sept 15th Meet your tax professional October/November for tax planning and projections. This is also the time you have a conversation with your tax professional about any major life changes. These activities may have an affect on your tax projections. Start the conversation now to avoid stress when the tax man comes knocking. Have a GREAT working relationship with your tax professional. Do you desire planning and not getting it? First ask for it, sometimes tax professionals aren t proactive in their service offerings. Still lacking that level of service, then start seeking a new service provider. Create a strong financial team You ll want to have the following on your team: Tax Professional (CPA/LTC), Financial Advisor, Banker and even an outsourced accounting team. accountingdepartmentinc.com info@accountingdepartmentinc.com

7 About ADI Accounting Team: The Accounting Department provides full cycle bookkeeping services using remote accounting tools and paperless solutions. Staying on top of technology and creating a system that allows your entire financial team access is key to a proactive approach for your business. What makes us unique is our team approach and 25+ years of accounting and bookkeeping background. The Accounting Department is located in the Portland, OR Metro area, and we have the pleasure of working with clients from all over the United States. After reading this, do you see areas of liability or gaps in your systems? Contact us at team@accountingdepartmentinc.com or for a complimentary 30 session to discuss all things accounting and solutions to your particular needs. accountingdepartmentinc.com info@accountingdepartmentinc.com