Monthly Bookkeeping Habits to Set You Up for Year-Round Success

There are 42 days left until 2025! The new year is just around the corner

Have you starting planning your goals for 2025? As the year draws to a close with only 42 days left, and your business continues to grow what are you doing to prepare for the new year, and the growth? I have owned an accounting firm for over 14 years and here are some tips to prepare before the end of the year and into next year.

Get your notebook ready! I am about to share a whole bunch of information!

Reconcile your accounts every

single month.

The number one thing I always check first and is the most IMPORTANT thing in my opinion is to make sure that your accounts are reconciled. EVERY.SINGLE.MONTH.

Keeping your accounts in check is super important for your business's financial health. Basically, it's all about comparing your records with your bank statements or other service providers to spot any discrepancies and make sure everything's accurate. This not only helps you keep track of your cash flow but also catches errors or sneaky fraud early on. Regularly reconciling your accounts makes for better budgeting, smarter financial decisions, and peace of mind knowing your records are up-to-date and reliable. By setting aside time each month for this, you can keep your finances in order and plan confidently for the future. If there are any outstanding transactions that haven't cleared, figure out WHY. If you don't figure out why they haven't cleared and leave them outstanding there are several issues that will happen.

Here are a few reasons as to WHY they may not have cleared that month:

• You wrote a check in one month, but the recipient didn't cash it yet. When they cash it you would reconcile it in the month it cashed. Date the check for the date you wrote it. If it is outstanding for 1 month, that's okay!

• You sent a check to a contractor, but it hasn't cleared your bank. Usually after a few weeks of it not clearing I will reach out to them to see if they've received it.

These are potential issues that will come up if you don't reconcile the accounts.

• If you reached out to them and they did not receive it you will have to reissue the payment to them.

• They may hold it for several weeks. You forgot that the check was written. When they cash it, it can impact your cash flow or even overdraw your account which will incur extra fees for you AND the recipient.

• If the payment was never received, whether it was through a check or a credit card transaction. Your expenses will be inflated which will affect your net profit and make it lower than it really is.

• If it is a vendor you have to issue 1099's to at the end of the year then you could potentially issue the 1099 for the wrong amount, which means you'd also be giving the IRS incorrect information.

• There are a few more issues, but I will include them in another section.

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Not having vendor names for every transaction

This is probably more of a pet peeve of mine, but it is for good reason.

Have you ever wanted to see how much you’ve paid a vendor? Then you go into QBO, search the vendors name… and there are 2 transactions when you’ve paid them over 25 within the last year alone. Then you have to go and search through your transactions to find them which takes hours! Since you are reconciling your accounts, make sure and add those vendor names.

• Another reason, when you are trying to submit 1099s at the end of the year, without those vendor names you can once again issue the wrong amount to the IRS and vendor.

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Setting rules in QBO and forgetting about them.

I have such a love hate relationship with QBO. One of the reasons is they market that anyone can do it, set up rules and forget about it. They will automatically match transactions and blah blah blah…. And I am not knocking anyone who is trying! I am sure you are doing a great job and the best that you can. Like with this whole blog and marketing thing. I don’t know what the hell I am doing! Thanks to Pinterest and Google I am making a little headway! HOWEVER, if I mess up on my marketing I won’t get any followers and no one will see my post. If your accounting is messed up it could be absolutely detrimental to your business.

I like the rules in QBO sometimes. However, when I pick up a new client the very first thing I do is go into this area and turn off the rules immediately. I cannot tell you how many clean up jobs we have had to do because of the rules. Yes, they save time, but if you aren’t reconciling your account monthly and checking to make sure it didn’t glitch. Then it could be doing more harm that good. I have seen it glitch and all of a sudden categorize fuel purchase at Shell to income. WTH QBO!

Not to mention, we had to clean up one of our own clients books because the client re-linked their bank account and had been turning on rules. When she re-linked the account 2 years of transactions were automatically imported. I could go on for hours.

• If you are going to use rules - DO NOT and I repeat DO NOT create it where it automatically imports it into the register.

• If you are going to use rules - only use them to categorize the transactions, but you still accept them before they hit your register.

  • You are probably thinking - but this is going to take so much time. But it won’t. It will save you a ton of time and potentially thousands of dollars to clean up.

If you get nothing else from this post. Please take this advice.

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Last and final tip -

PLEASE PLEASE PLEASE do not link your personal accounts in with your business accounts.

This is a HUGE no no! If you are using credit cards that are a mixture of business and personal I still say NO. NOOOOOOOOOO! This will cause more headache, confusion, and could cause very serious consequences both financially and legally. Here are some tips to get around it:

Debit: Office Supplies    Credit: Owners Contribution

Pro Tip: Once you enter your Journal Entry, go to your Profit and Loss, filter by the month you entered it and make sure it is correct. 

• If you are using a credit card that is a mixture of both personal and business then you want to create a journal entry for the items that are business expenses.

  • Example: I purchased ink and office supplies with my personal card. This is the entry to do to get it into your books as an expense. I will make a good ol fashioned T chart for you.

    • By doing it this way, it will add the expense and then show it as an Owner’s Contribution (you put money into the business).

    • Another major issue I have with adding personal accounts mixed in with business. It shows you have taken a lot more money OUT of the business than you actually did which could result in higher taxes and other issues. By doing this you will not get a clear or accurate picture of how your business is doing.

Which leads me to my last last final tip. How to pay yourself.

I mean we aren’t in business for ourselves to deal with the stress and not get paid. If you are not on payroll then you simply transfer or write yourself a check into your personal checking account and categorize it as an Owners Draw. That simple!

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I hope this information was helpful. As a reminder this information is for general educational purposes only. It is best to talk to a professional about your specific business and situation as every single one are different.

If you aren’t sure who to reach out to send me an email and we can jump on a consult call to discuss! I’d love to hear from you.

If you have any other questions or have specific topics you’d like for me to cover let me know as well!

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