Tell Your Bookkeeper When Something Changes, Not Six Months Later
Your bookkeeper does not need a running commentary on everything happening in your business.
We do, however, need to know when you take out a $40,000 loan.
Preferably before we discover it three months later while reconciling the bank account.
If something changes financially in your business, send your bookkeeper a quick email when it happens. You can save yourself cleanup work, questions, and possibly some very confused financial statements later.
QuickBooks can show me the transaction. It cannot explain the transaction.
This is an important distinction.
I might see $25,000 deposited into your bank account.
What I cannot see from the bank feed is whether that money was:
A business loan
An owner contribution
A transfer from another account
A customer payment
Proceeds from selling equipment
Something else entirely
Those things are not interchangeable from an accounting standpoint.
The same problem happens when money leaves the account.
A $1,200 payment might be an ordinary business expense. It could also be a loan payment containing principal and interest, an equipment purchase, an owner draw, a tax payment, or a transfer.
Seeing the transaction is not the same thing as knowing what happened.
Please tell your bookkeeper about new accounts
Opened a new checking account?
New savings account?
Business credit card?
Line of credit?
PayPal, Stripe, Square, Venmo, or another account that will regularly hold or move business money?
Tell us.
A new financial account usually needs to be added to your bookkeeping system and reconciled along with everything else.
Finding out about it at year end creates a much bigger project than adding it when it opens.
Loans deserve their own special announcement
This is one of the big ones.
Please do not let your bookkeeper learn about a new loan because mysterious deposits and payments have started appearing.
We need the loan documents.
We need to know how much you borrowed, when you borrowed it, and what the loan was for.
We may also need an amortization schedule so payments can be divided correctly between principal and interest.
A loan payment is generally not just one giant expense every month.
This is exactly how strange balance sheet numbers are born.
Big purchases are worth mentioning too
Bought a new vehicle?
Computer system?
Expensive equipment?
Furniture?
Major improvements to your office?
Tell us.
Depending on what you purchased and how much it cost, it may need to be recorded as an asset rather than simply categorized as an expense.
Your bookkeeper does not need an email every time you buy printer paper.
A $35,000 work vehicle is a different story.
Payroll changes matter
Started paying yourself through payroll?
Hired your first employee?
Changed payroll providers?
Added benefits or a retirement plan?
Started reimbursing employees?
These changes can affect several areas of your accounting.
Payroll is one of those things that can look deceptively simple in the bank feed. Behind one withdrawal may be wages, employer taxes, employee withholdings, benefits, and several liabilities that all need to be recorded properly.
Tell us what changed.
Ownership changes definitely matter
Added a partner?
Bought someone out?
Changed how ownership is divided?
Converted entities?
Made an S corporation election?
That is not something to casually mention next March while we are preparing the tax return.
Ownership affects bookkeeping, taxes, equity accounts, payroll, and potentially how money coming out of the business should be treated.
Bring your accountant or tax professional into that conversation early.
Sales tax is another big one
Started selling in a new state?
Started selling a new product or service?
Registered for sales tax somewhere new?
Started using a marketplace or payment system that handles some sales tax for you?
Please mention it.
Sales tax collected from customers is generally not your income. It is money you are holding until it is remitted to the appropriate taxing authority.
If nobody knows you started collecting it, that liability can quietly get buried in your books.
You don't have to know whether something matters
This may be the most important part.
You don't need to understand the accounting treatment before telling your bookkeeper.
That is our job, so send the email.
“I opened a new account. Do you need anything?”
“We financed a vehicle. Here are the documents.”
“We started using a new payroll company.”
“We're adding another owner next month. What do you need from me?”
Perfect.
I would rather tell you, “Thanks, I have everything I need,” than discover six months later that something important happened and nobody mentioned it.
Good bookkeeping is a team sport.
QuickBooks gives us the numbers.
You still have to tell us the story behind them.
