231: Handling Uncleared Bookkeeping Transactions Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Mompreneur, Freelancer, Bookkeeper, Virtual Assistant, Business Owner
231: Handling Uncleared Bookkeeping Transactions Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Mompreneur, Freelancer, Bookkeeper, Virtual Assistant, Business Owner, Or Self-Employed
Reconciling your accounts will make sure you have all your transactions accounted for each month, but when you have transactions that have not cleared the bank, you need to make sure you are taking care of these as well so that you don’t have incorrect data in your financial statements. It’s important to clean these items up in a timely manner so that you are not over or understating your net income for a specific period of time, and taking the time to clean these items up prior to the end of the year will help you prepare for your upcoming tax return. In today’s podcast episode, I cover what an uncleared transaction is as well as how to decide what you need to do to clean it up so that your financials are correct, especially if you find an uncleared transaction from a prior period that has already been closed or your tax return has already been filed. Some of these situations can get tricky, but it doesn’t matter if you are a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, it is important to make sure you are following these processes to ensure your financial statements correctly reflect your income. These tips are essential whether you are using a computerized software system like QuickBooks, Xero, Wave, or FreshBooks for your business finances; or doing your bookkeeping manually with an Excel spreadsheet or even a Google Document…
Learn about the Under Pressure: Stress Management And Resilience Program here:
Find out how you can work with me by either scheduling a free consultation or signing up for the BALANCE Life Coaching program, where you can get private one-on-one coaching every week. Find out where you’d like to see yourself and your business in the future. We’ll create a laser-focused plan, including which action steps you need to take to get started on the path to success:
Accountants, CPAs, Bookkeepers, Tax Preparers & Financial Professionals, sign up here to get updates on upcoming opportunities & grab the Audit Of Your Well-Being & Balance Guide here:
Ready to set up your business? I have a program to help you get your business set up so that you can start making money. Sign up for this program here:
Are you ready to try coaching? Schedule an Introductory Coaching Session today. You’ll have the opportunity to see how you like coaching with an Introductory Coaching Session:
Join us in the Mastering Your Small Business Finances PROFIT LAB if you are ready to take control of your business finances and create the profitable business you are striving for. Are you ready to generate revenues and increase the profit in your business:
If You Are Ready To Choose, Start Or Grow Your Side Hustle, Get Your Free Checklist And Assessment Here:
Grab Your FREE guide: 5 Essential Strategies For Stress-Free Bookkeeping:
Your FREE Online Virtual Bookkeeping Business Starter Guide & Success Path Is Waiting For You:
Join Our Facebook Community: https://www.facebook.com/groups/womenbusinessownersultimatediybookkeepingboutique
The Strategic Bookkeeping Academy, including Bookkeeping Basics, is open for registration! You can learn more and sign up here:
Looking for a payroll solution for your business? You can get an exclusive 15% discount on your payroll services when you sign up here:
QuickBooks Online - Save 30% Your First 6 Months:
Sign up for a virtual coffee chat to see if starting a Bookkeeping Business is right for you:
Show Notes:
Reconciling your accounts will make sure you have all your transactions accounted for each month, but when you have transactions that have not cleared the bank, you need to make sure you are taking care of these as well so that you don’t have incorrect data in your financial statements. It’s important to clean these items up in a timely manner so that you are not over or understating your net income for a specific period of time, and taking the time to clean these items up prior to the end of the year will help you prepare for your upcoming tax return. In today’s podcast episode, I cover what an uncleared transaction is as well as how to decide what you need to do to clean it up so that your financials are correct, especially if you find an uncleared transaction from a prior period that has already been closed or your tax return has already been filed. Some of these situations can get tricky, but it doesn’t matter if you are a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, it is important to make sure you are following these processes to ensure your financial statements correctly reflect your income. These tips are essential whether you are using a computerized software system like QuickBooks, Xero, Wave, or FreshBooks for your business finances; or doing your bookkeeping manually with an Excel spreadsheet or even a Google Document…
Welcome Back…Whenever you find an uncleared transaction in your books, you need to follow through with it to see how you should handle it properly so that your income is reflected correctly. You may find uncleared transactions if you are doing your bookkeeping manually or when utilizing a computerized software system such as QuickBooks Desktop or QuickBooks Online. In this episode, I’ll be referring to cleaning up your uncleared transactions when using QuickBooks Desktop or QuickBooks Online since they are such widely used programs, but regardless of which system you are using for your bookkeeping, you can follow these same processes, and if you are interested in purchasing QuickBooks Online, you can go to www.FinancialAdventure.com/QuickBooks to receive thirty percent off your first six months.
Let’s start with what a cleared transaction is. If you have a cleared transaction, you will have a transaction that is listed in your books, and the bank will show the transaction as clearing as well. An uncleared transaction is when there is a transaction that has been recorded in your bookkeeping system that has never cleared the bank. This means that either the bank never cashed a check, or a deposit may have never been recorded on your bank statement. When this happens, you need to do a little research to find out why the transaction has not cleared the bank, so you know exactly what you need to do with it to clear it up on your books. Any uncleared transactions are also recorded in your book balance, but your bank will not show this amount. For example, if you wrote a check for $1000 to a vendor, but the check still shows that it is uncleared, it would mean that the vendor probably never cashed the check, and the bank never deducted the money from your bank account. This will cause you to have a different balance in your book balance than the bank shows for your bank balance. These uncleared transactions can show up in your bank checking and savings accounts, your credit card accounts, loans, or other accounts you might have for your business. Not only is it important to reconcile your balances each month to ensure that you have all of your transactions accounted for, but you also want to make sure that you are looking into any uncleared transactions as soon as possible so that your financial statements are accurate. Uncleared checks could be overstating your expenses, and any uncleared deposits may be overstating your revenues or sales.
So how do you know if you have any uncleared transactions that you need to clean up? One of the best ways is to take a look at what has not cleared when you are doing your bank reconciliation. If you are utilizing QuickBooks Desktop or QuickBooks Online, you are probably familiar with their bank reconciliation feature. When you go to reconcile your account, you simply check off each item that has cleared your bank statement, whether it was a check or withdrawal, or a deposit to your account. When you have successfully checked off each item that has cleared the bank, your difference will be zero, which means that you have successfully reconciled your account. Before you click on the reconcile now button, take a few minutes to review the unchecked transactions. These are all the transactions that have not cleared yet and the items that could be causing you to have an incorrect balance or impact your balance sheet or income statement reports. If you are seeing transactions that are listed with dates that are after the statement cut-off date, that only makes sense that they would not have cleared yet since they would clear after this statement date, but you do want to dig deeper into any uncleared transaction that has a date prior to the statement cut-off date. You may want to create a process that requires you to look into any transaction that is at least 30 days older than the statement date to give your transactions time to clear. When you do this, it is easy to look over all of the items that have not cleared.
The next step is to find out why your uncleared transactions haven’t cleared yet. Here you will need to do a little investigating. Let’s take, for example, that $1000 check we talked about earlier that you wrote out to one of your vendors. You may want to double-check that you didn’t duplicate the check first. If you don’t believe the check has been duplicated or entered twice, you could contact the vendor to see if they still show that the amount is owed by you. Maybe the check got lost in the mail, and you need to reissue it to the vendor. If it was indeed a duplicate entry, you would need to void the transaction. You would do this same investigation with any deposits that you might show as uncleared as well.
Once you know what is happening with your uncleared transactions, it is time to clean them up. One important thing to consider when you are cleaning up transactions is to pay attention to the date the original transaction was recorded. If you are preparing financial statements and closing the date on them each year so that you can prepare your tax return or if you set a closing date each month, you want to make sure you don’t change any of your information for those prior periods unless you check with your tax preparer or accountant to see if you need to amend your tax return with these changes. If you are cleaning up a transaction from a prior period or a closed period, and your tax preparer or accountant advises you to make the changes in the current year, you would more than likely need to create a journal entry to reflect these changes in the current period or month. To create a journal entry, you will need to go to the company tab and select create a journal entry. From here, you will be able to create the journal entry to clear your uncleared transaction. You will enter the account you are clearing the transaction for as either a debit or credit, depending on your situation, and you will offset this amount by the original expense or account that was used in the original transaction. If you are making changes to a current period, you could easily either void or delete the transaction if it was a duplicate or error. If you need to reissue a check, you could go back to the original check and simply check the to be printed box and print a new check. Make sure that when you are making any adjustments like this that you make a note of the old check or transaction for your records.
Once you have taken care of the uncleared transactions, you should be able to check them off on your bank reconciliation. If you created a journal entry to clean up the uncleared transaction, you will see the original transaction in the bank reconciliation screen, as well as the journal entry you created on the opposite side. You will be able to check off each item, and you will again be in balance and can then reconcile your account.
You know that I highly recommend that you reconcile your accounts on at least a monthly basis. When you do this, you can easily keep an eye on items that are not clearing your bank statement. By monitoring these transactions each month, you will ensure that your financial statements are not only timely but they will be accurate as well. I find uncleared transactions to be one of the major issues I help my clients with. There are times when we are cleaning up multiple transactions that are uncleared from not only the last year, but sometimes these transactions go back five to ten years. If you can stay on top of your uncleared transactions and don’t let them get out of control, you will be able to catch these items sooner, you’ll have a better recollection of what happened with the transaction, and you’ll have more confidence in your book balances. When you are current with your bookkeeping, it makes everything easier. Schedule time every day, week, or month to do your bookkeeping, and you’ll start seeing positive results by not only knowing how your business is doing, but you will start to feel you are able to accomplish your bookkeeping tasks confidently as well. When your bookkeeping is up to date, think about how much more satisfying your business will be, as well as the peace of mind you’ll have knowing everything is accurate, and you can make sound business decisions from this data. Having your bookkeeping up to date in this last part of the year will also help you make good tax decisions and have strategies in place so that you can save money on your taxes. You’ll know exactly how you are sitting for taxable income this year compared to last year at this time and if it would be beneficial for you to include additional expenses you’ve been thinking about making this year. Being strategic about your expenses could save you from paying additional taxes. If your bookkeeping isn’t up to date, you won’t have this availability to strategize and make good decisions before the end of the year.
Imagine having a system in place where you spend less time buried in paperwork and more time doing what you love. That’s where I help my clients. They are able to have proper processes in place, understand why they are following through with these processes, and they have more peace of mind when it comes to their business. Striking a balance between the demands of running a business and maintaining a fulfilling personal life is an art; it’s about creating an environment where you can thrive and support your lifestyle. By being proactive and setting up efficient processes, you can ensure a smoother, more enjoyable year-end, and you’ll be prepared to file any necessary filings with the IRS. By working with me, you’ll change more than just your bookkeeping processes. Like many of the clients I’ve worked with, you’ll go from not knowing how to get through all the stressful situations or being unprepared to being totally in control of exactly what you are choosing to get done at the time you want to have it accomplished by, all while knowing you are doing enough and you’re able to enjoy your business and your personal life. I help clients just like you with strategy, mentorship, and coaching. When you work with me, you’ll show up much more differently than you do today, and, after all, this is what you ultimately want in your life, right? You can be stress-free in both your professional and personal life. Come join me. When I work with clients throughout the year, they are able to reduce their stress and overwhelm, understand how to master their small business finances, develop solutions to grow their bottom line, and create a work-life balance they truly enjoy. I encourage you to take the next step by signing up for a free consultation where I’m going to teach you the first step in my process so that you can eliminate stress, overwhelm, or overworking in your professional or personal life while you continue to get done what matters so that you can live your life with joy, purpose and a more fulfilled life. Feel free to reach out to me with any questions you have; I’d love to help you on this journey. You can schedule your free consultation or sign up for a coaching session today at www.FinancialAdventure.com. As a Certified Public Accountant and Certified Life Coach, I can help you set goals and develop a plan that will allow you to lead a happier and more sustainable life in your business, career, or your personal life. I’m here to guide you through the financial aspects of your business as well as help you focus on the strategies you need to follow to reach the success you want to achieve in your professional or personal life and stay committed so that you can continue to keep pushing forward and relieve the stress, anxiety, or overwhelm you are currently feeling. Having an accountant and certified life coach like me can provide you with valuable insights and ideas to help you simplify your life, which enables you to go back to enjoying your professional and personal life. I work with business owners, accountants, and other financial professionals to create the actionable steps they need to take to ultimately achieve their goals while getting relief from the stress and overwhelm they feel from the pressure of owning a business, deadlines, and the workload they face every day. If you are struggling with this as well and would like some help developing a solution, help strengthen and maintain your emotional health, increase your well-being, create a more positive, happy, and joyful life, set and achieve your goals, and manage your relationships, I’d love for you to join me in my Balance Life Coaching program so that you can live a more purposeful life. Each week, we meet privately one-on-one, and you get to bring whatever is on your mind on any given week. I also have a daily coaching program where you can talk to me whenever it works best for you, 24/7, any day of the week. In either program, you get to work on your highest priority, whatever you want more of in your life, or if there is something that is weighing on you heavily that you need coaching on, and we’ll work through it together. Having a certified life coach like me helping you through all of this allows you to feel so seen and cared for, and the results are amazing. Everyone benefits when they work with a certified life coach. After every session, you feel energized, and you know exactly what to do for the day or week to come, and relief knowing we will meet again to go over anything that comes up after your session. You’ll gain self-awareness while you take each step toward your goals. The investment in either of these programs is an easy yes for you. I’ve set these programs up in the most supportive way. If you are ready to join the Balance Life Coaching program, you can go to www.FinancialAdventure.com and click on the work with me button. You’ll see the link to join as well as additional information about the programs. Sign up now. There are limited spots available for these programs due to the one-on-one aspect, and they do sell out. If the payment link is gone, you can get on my waitlist to join the programs when additional spots are available. I help people get results and live a more joyful life. I coach everybody on everything. I know there is something you want in your life, and I can help you get it. I know this is something you’ve been waiting for. I’ve been asked by many of my listeners to create these exact programs. The faster you get access to the program, the quicker you’ll see the possibilities available to you. I also have a risk-free guarantee. I believe so strongly that everyone benefits from coaching that when you sign up for the Balance Life Coaching program today, if for any reason you are not satisfied with your first session, you can send us an email, and we’ll refund you immediately. Are you ready to enjoy your life now? Why would you want to wait? Make this investment for yourself. Take the journey with me…make it happen for yourself. Ask yourself why you need this program in your life right now. Are you ready to make bigger, bolder, stronger life goals? I’m looking forward to meeting with you soon and digging deeper to see where you currently are in your business or career and start creating actionable steps so that you can reach your vision and goals for the future, not only in your business or career but also in your personal life. I’m ready to work with you, see all of your successes, and watch you thrive in your business or career while creating your best work-life balance. I’ll post links to this and other valuable resources for business owners and accountants where you are listening to this podcast.
And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you need some accountability, join our PRIVATE Facebook community and post your action item, we’d love to support you.
Comentários