Maintaining Your Checkbook
When having our firm maintain your ledger, your check-stubs are our primary source of information for your record-keeping system. It is vital that these are maintained in such a manner that the bookkeeper can correctly post your cash receipts and disbursements.
Each check-stub needs to clearly indicate the date, to whom the check was written, the purpose of the check - indicating to which account the check is to be posted, and the amount of the check. Being familiar with what are tax deductible expenses, what items must be capitalized, what items require special handling for tax purposes and your chart of accounts will enable you to provide a succinct description for the bookkeeper.
Items that require special attention include insurance premiums, auto expenses, travel and entertainment expenses and capital purchases. Each of these items requires additional information to insure proper handling by the bookkeeper. For example, certain insurance premiums are not tax-deductible while others are partially deductible, new restrictions make certain entertainment expenses partially deductible, auto expenses are only deductible for that percentage that the vehicle is used for business purposes, and many capital purchases require additional documentation for the bookkeeper.
The check-stubs also record the deposits made to the account. Most deposits are income from the ordinary course of business and a description or detail is not necessary. However, it is important to separately deposit any money that is received from sources other than as income in the ordinary course of business. These deposits need to be described as to what they are; e.g., loan proceeds, refunds from suppliers, tax refunds, or the owner making a loan to the business. Often additional supporting paperwork will be required by the bookkeeper for these items.
It is important that a balance be reflected in the checkbook at all times, the checks are kept in numerical order, and that all transactions be kept in chronological order. We suggest that voided checks be stapled to the check-stub.
When we are maintaining your ledger, we request that you have the bank send the bank statement directly to us. You send the checkstubs, invoices for any capital purchases and loan agreements to us. We will reconcile your bank account and provide you a statement of any corrections required to your checkbook balance.