Docs Your Bookkeeper Needs Every Month

Bookkeeping for each period begins with collecting documents of your financial activities over the course of the most recent period (such as last month, or quarter).

Each business and organization is unique, depending upon business model. So, what documents are needed to do the bookkeeping?

Let’s talk about the generic bookkeeping tasks that apply to everyone. Then we can discuss what may be unique to you.

Routine Bookkeeping Tasks

Every period we repeat the same general bookkeeping process: 

• Collect Documents

• Post Transactions

• Apply Adjustments

• Reconcile Accounts

• Produce Financial Statements

• Review Reports and the General Ledger

Collect Documents

Documents collected may include any variety of documents that offices may use in making and documenting transactions. Namely, this includes:

• Receipts

• Bills

• Invoices/Sales receipts

• Adjustment Schedules: Depreciation and Prepaid Expenses

• Bank Statements

• Credit Card Statements

Posting Transactions

To post transactions requires receipts, bills, and invoices.Posting transactions means categorizing income and expenditures to their appropriate accounts.

Bookkeepers can sometimes post transaction to accounts without receipts because they recognize income and expenditures on the bank statements by their descriptions, but there are always transactions that are hard to identify, for which receipts will be needed. Generally speaking, businesses should carefully collect all receipts and file them in an organized manner. If your business deals frequently in cash, receipts are the only way to track transactions.

Sharing Receipts…When a bookkeeper works nearby, hardcopy receipts can be picked-up in person; but when a bookkeeper works remotely, receipts will need to be uploaded to a shared folder in a cloud (such as in Google Drive, or Drop Box).

Payables and Receivables…

Entering bills for accounts payable and invoices for accounts receivable, may or may not be necessary for your business or organization. This depends, in part, on your accounting method (cash-basis or accrual-basis). Payables and receivables are accrual-basis by nature, so you may not need to track these things when you’re on a cash-basis.

If your books are kept on an accrual basis…

Everybody has bills, but not everybody issues invoices. As such, if you never issue invoices to customers, then there are no receivables you need to track.

Apply Adjustments

To apply adjustments, a bookkeeper needs adjustment schedules.

Adjustments record when assets are expensed piece-meal over an extended period of time. This applies to businesses accounting on an accrual-basis with prepaid expenses (such as insurance premiums, multi-month leases, and yearly subscriptions) and/or depreciation of fixed assets. Schedules that track prepaid expenses and depreciation are necessary to ensure adjustments are made correctly.

Reconcile Accounts

Bank accounts and the books sometimes don’t agree. The process for comparison of the bank accounts with the books is called reconciliation, which will require bank and credit card statements.

There is usually a difference between the book value of current assets (cash-on-hand, checking accounts, and savings accounts) and your bank statements. This discrepancy is due to records on the books that have not yet affected the bank balance, or vice versa. Reconciliation is the process by which we show that the discrepancy can be explained, and that the numbers are correct, despite being different.

If bank accounts are not reconciled every period, we cannot be certain of the accuracy of the books. To reconcile accounts that haven’t been reconciled recently will require catch-up work. If accounts cannot be reconciled, then the books will require a clean-up. 

Produce Financial Statements

Once all transactions have been recorded, adjustments have been applied, and reconciliations performed, reports can be generated for the period. The two essential reports everyone will have include the Balance Sheet and the Profit and Loss Statement (also called, the Statement of Financial Position and the Statement of Activity by non-profits). Other common reports that may be needed by management include, Accounts Payable and Accounts Receivable Summaries. Most businesses or organizations will need additional reports specific to their business models. A bookkeeper will need additional documents to be able to record these aspects of business activity.

Other Documents Needed

In a variety of other circumstances, additional documents beyond what has already been described will need to be collected for the bookkeeping.

If you run a retail business, you will need to track inventory as well as cash sales. In this circumstance, a bookkeeper will need to the following documents:

• Purchase Receipts/Invoices

• Freight Fee Receipts/Invoices

• Point of Sales System Registers

• Sales Receipts

If you run a retail business that sells items on commission, a bookkeeper will need:

• Commission Inventory Summaries (Items, Commissioner information, commission rates)

If your business often makes payments by check to pay bills or to make payroll, a bookkeeper will need to see, either:

• The Check book, or

• A summary of written checks

If your business keeps a petty cash box for occasional small purchase needs, you will need to document:

• The Petty Cash Register

While there are always yet more documents that an business may need to furnish to their bookkeeper, these are some of the most common that many owners and managers will need to use and organize in their day-to-day operating procedures. All of these things are original records of business transactions, without which the bookkeeping cannot be completed!