Accounting
Accounting and bookkeeping are essential to every small business owner. They not only prevent mistakes or falsifications in record keeping that can cost you dearly, but also help you keep track of the "pulse" of the business by monitoring cash flows. Below is the Small Business Administration's checklist for simple items to watch on a regular basis.
Compare Actual Results To Budget Every Month
Each and every month you need to compare your income and expenses to your budget. This review is perhaps one of the most important tools for a small business owner. It's a great way to learn what's working and what's not working with your business.
Scan The Check Register
Periodically (say every 3-4 months) you should take a look at the check register just to make sure all the payees are familiar to you. Multiple checks written around the same time to the same vendor could be an indication that funds are being diverted.
Review The Bank Reconciliation Monthly
This step is important, particularly if you have one person doing all the bookkeeping: writing checks, posting entries, preparing financials, etc. Look at any adjustments to the bank accounts, old items, etc.
Look at canceled checks. Occasionally (say 1-2 times a year) pull out a bank statement and flip through the canceled checks making sure that all those signatures are yours, that you recognize the vendors and scan the endorsements on the back.
Review Statements From Vendors
Every now and then (say 3-4 times per year) take the time to open the mail and look at statements from vendors (many vendors have stopped sending statements, but they will send late notices). Here you want to make sure that your business is in good standing with vendors - long overdue invoices might be an indication that a check you thought was going to a vendor actually went in someone else's pocket, or that an invoice has been overlooked.
Review Payroll Register
"Padding the payroll" is a common problem in some industries -- such as construction or cleaning services where it is common for the crew to go straight to the jobsite and perhaps not come into regular contact with the owner.
Review your Accounts Receivable
This needs to be done on a regular basis. Of course you need to know if you have any slow paying customers and a periodic review would also disclose any scheme of "misapplying" customer payments.
Take A Physical Inventory
Many small businesses have very poor inventory records, so if you have a large amount of inventory or a high volume business, you probably will want to work with your accountant and get some type of perpetual inventory system set up.
