It’s June already and that means that it is time to do a mid-year check-up!
Why is it important to do a bookkeeping mid-year check-up?
Performing a mid-year check-up is a simple and effective way to ensure that all of your accounts are in balance and nothing was entered incorrectly.
A mid-year bookkeeping check-up can save you time, money, and stress at the end of the year. Making sure all of your accounts are in balance will also help you to be more prepared for tax season. By having an accurate view of your business’s financial standing you can make changes for the second half of the year if need be, and start planning for the following year.
In a previous blog post, Check Yourself, I go over the following steps for performing a quarterly review, but it works as a mid-year check-up too.
To start, make sure that you have reconciled all of your accounts. Then pull your most current bank statements for all accounts including any loans and credit cards, your balance sheet, payroll report, and your profit and loss statement.
First, make sure that the ending balance on your statements matches your balance sheet as of the statement date. The figures should always match unless there is an explanation for the difference. If there is no explanation then you will need to do some clean-up in that account.
Now look at the accounts receivable and accounts payable. Neither should ever be negative. If they don’t look accurate then those accounts will need to be looked into further to see where the problem is.
If you have any loans make sure that your last statement matches what is on the balance sheet.
Your payroll liabilities and sales tax liabilities should be at a zero balance, or if there is a balance it should be the amount due in the near future. If that is not the case you will need to look into what was posted incorrectly so it can be updated to reflect the correct amount.
Now let’s look at your expense accounts to make sure all of your purchases are recorded correctly in the proper categories. You don’t want to have the same expense listed in different categories. For example, you don’t want to have postage listed in miscellaneous expenses in January and then listed as office supplies in May.
After you have checked those it is time to verify wages. To verify wages you check that the figure on your payroll report matches that on your profit and loss statement. If they do not match you will need to go back and see where the discrepancy occurred.
If you have any loans another mid-year check will be to verify the interest paid year-to-date on the statement matches your profit and loss.
It is also a good idea to do a mid-year check-in with your CPA to ask any questions you may have in regard to year-end tax planning. In return, they may also have questions for you so they are more prepared in the last half of the year and leading up to tax time.
As always, we are here to help. We offer a diagnostic review service where we do this for you! If you are interested, schedule a call.
