15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Three Reasons it is Important to Reconcile Your Bank Accounts Each Month

Tax calculator and pen

When it comes to your business financials, accounting payroll taxes are all important for success. In order to excel in these endeavors, reconciliation is an important activity that should be conducted each month. Although the reconciliation of your bank accounts can take time, there are three reasons why it is important for your business.

1 – Validates Data Entry
Reconciliation is important for accounting payroll taxes is because it validates the data entry process. When you reconcile, you can identify errors that might occur during the monotonous data entry process. You might also uncover errors from the bank statements. There might be missing transactions that need to be recorded for your books to balance correctly.

2 – Record Accurate Financial Statements
During the reconciliation process, you have the opportunity to ensure that your books are properly balanced. If they do not balance, you can correct the mistakes. This way, your financial statements will be accurate. If you do not go through the reconciliation process each month, you might have multiple errors. This means that your financial reports are not correctly depicting the performance of your company. In addition, you might not fully understand how much money you have on hand. Thus, it is smart to reconcile to ensure that you have a proper understanding of your financial situation.

3 – Accurate Reporting
At the end of the year, you will be required to report your financial performance to the government. Errors in your performance put you at risk of an audit. Also, if you have not reconciled, it is hard to compile a tax return. With regular reconciliation, you will understand how you are performing and be able to report it to the IRS.

Reconciliation plays a big role in accounting payroll taxes. If you do not have time for it, you can always outsource this task to a trusted bookkeeper. It is better to know that your books are up to date than have books that are not accurate.