Monthly Accounting Services

Helping you classify transactions correctly on a monthly basis for better financial reporting

“When there is a hill to climb, don’t think that waiting will make it smaller.”

My client base is largely small business owners, and currently they range in size from the sole proprietor home-based business to companies with up to $10 million dollars in revenue. One thing that many small business owners have in common is that they would rather spend their time on operations rather than accounting. This oftentimes results in a mad dash to get the year’s income and expenses summarized for tax purposes shortly after year end.

However, this is not a proactive philosophy. Business information is most useful in real-time, not after the fact. Leaving accounting and financial reporting for the end of the year results in missed opportunities for profitability and decision-making. Many small businesses fail for this very reason. The numbers are ignored until it is too late. Wouldn’t it be helpful to see that sales are trending down before the company is underwater? Wouldn’t it be helpful to make a decision about collecting receivables faster before cash is depleted and there are no funds for payroll? Monthly accounting helps to accomplish this.

Monthly Accounting Services Described

For monthly accounting to be beneficial, first we have to start with accurate and reliable information. This generally involves an accounting system. Many of my clients are on QuickBooks Online, but others may use Xero, Wave, Sage, or even an Excel spreadsheet. Regardless of the method used, it is important that transactions are classified correctly on a monthly basis for financial reporting to be useful.

Monthly accounting services as I’m describing here include:

  1. Determining the correct classification of monthly transactions in the client’s accounting system of choice and ensuring that classifications are consistent.
  2. Ensuring that bank and credit card transactions are reconciled on a monthly basis, or assisting with these reconciliations as necessary.
  3. Looking at cash management of inflows and outflows to determine whether cash is being properly managed.
  4. Looking at reasonableness of expenses and determining whether the transactions occurring in that month make sense for that particular business based on industry, amount, and frequency.
  5. Coding transactions as closely as possible to how the tax return will be filed for efficiency purposes at year end.
  6. Reviewing essential monthly financial reports and comparing results against previous years and/or months. For the most proactive companies, actual results can be compared against budgeted results.
  7. Keeping an eye out for possible tax savings and potential tax issues.
  8. For entities incorporated under state law, taking a look at whether there is adequate separation from the owner(s) in managing assets, liabilities, and observing entity formalities.

Time Required to Perform Monthly Accounting Services

Once a company’s books accurately state its financial position, monthly accounting services for a small business generally may range in time from just a couple of hours to five or six hours each month. Some important determining factors are: 1) how many transactions are running through the bank, 2) how many bank accounts and credit cards the business has, 3) the quality and consistency of the bookkeeping, 4) accounting method (cash or accrual), 5) accounting processes used, and 6) the type of information the business owner finds useful for operations decision-making.

The more work the business does itself either through the owner performing his/her own bookkeeping or hiring a capable bookkeeper to record transactions, the less time it will require at month end to get the type of useful business information and analysis that will benefit the company.

The sooner the work is completed after month end, the more useful the information will be. Therefore, it is important for the client to communicate with us regarding:

  • readiness for month end services on a monthly basis
  • any particular needs or questions the client wants explored
  • questions we have regarding transactions

As a follow-up, it is also important for the client to use the information provided in accordance with their best business judgment and without significant delay, as factors affecting business change quickly, and failure to act can compound problematic situations.

Firm Pricing for Monthly Accounting Services

The firm has moved to a subscription billing model for monthly accounting services. Please contact us for more details.

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