The bank account is where most of, if not all, your transactions are recorded. These transactions are used to calculate your income, your expenses and other assets and liabilities. All of these are important for producing accurate, timely accounts. Having complete records means that, as your accountants, we can ensure you get the most amount of tax relief available.
There is also the legal requirement of complying with the laws and regulations of running a business, producing accounts and combating Money Laundering and fraud. If the bank doesn’t agree, then the rest will probably be wrong too with the consequences of not being able to plan properly and not complying with regulations.
If the bank doesn’t balance, your bookkeeper or accountant has to find out why before any other work can be done on your accounts. This can be time consuming if the bank statements aren’t all there. Without them there is no way of checking that Xero (or whichever system you use) is correct. This means you need to upload to Xero every page, for every month, for every bank account and credit card you have.
Bank feeds on Xero whilst great in so many ways, can still sometimes have errors or duplicates. It is, therefore, best practice to ensure that you’re still making sure your physical statements match Xero at the end of each month. If the original balance entered onto Xero is wrong to start with the bank is not going to be right. To make sure it is right, check the first balance on Xero against the balance on the same date on your statement. If it doesn’t match the opening balance needs to be manually adjusted. The incorrect figure can impact on profit and ultimately the tax you pay.
If you don’t have a bank feed and someone types up the CSV, ask them to have a running balance column and check against the statement regularly. If your accounts package has a bank feed, make sure that the beginning (opening) balance and the closing (end) balance is the same as the paper statement from the bank.
If you find a problem there are a number of ways to correct them. Xero has a fantastic support system, just click on the question mark in the top right hand corner and type in your question. We also provide our clients with Xero training and we are always on hand if you need guidance. To find out more about the accountancy services we offer, please get in touch.
