As a small business owner, you know how important it is to keep track of your company’s finances. But, sometimes your bank statement is not updated with the most current information. For an up-to-date picture of your business’s transactions, you can use a check register.
What is a check register?
A check register, or cash disbursements journal, is a record of cash and check transactions. You use a check register to calculate a running balance of your checking account. When you spend or receive cash, you record the transaction in the check register. You can see your latest account balance on the check register.
Recording in a check register
A business check register includes columns that help you organize your cash and checking transactions. The columns in the check register include:
- Check number or category
- Date of transaction
- Description or notes
- Account balance
Here is an example of a check register:
|Check Number/Category||Date||Notes||Payment/Debit||Deposit/Credit||Account Balance|
|XYZ Supply Store||6/12/16||$60||$310|
Often, you can find a check register in your checkbook. You can also record your check register on paper or your computer.
No matter where you keep your check register, record every cash and checking transaction. Update your check register each time you spend cash or write a check. This ensures you have an accurate balance in your check register.
Business checking account
To organize your check register, consider opening a business checking account. Keep business transactions separated from your personal expenses. Combining personal and business transactions causes issues with tax filing, financial reporting, and budgeting.
You can apply for a business checking account at your bank. Or, you can open a small business bank account online. A business checking account helps you track your company’s progress and file your business income tax return.
Keep a check register for your business checking account. By keeping a check register, you see how much money you can spend in your business checking account.
Benefits of using a check register
A check register is an important part of your accounting process. The register reveals what kind of purchases you make. You can use the cash register to review your purchases and make spending adjustments.
Looking at the different parts of a bank statement online can be misleading. Sometimes, transactions do not show up on your bank statement right away. Check registers give you a real-time record of your bank account.
For example, you might mail a payment to a vendor. It takes a few days for the vendor to receive the payment, cash the check, and the check to process. But, with cash-basis accounting, you record the expense in your check register when you write the check.
Recording the payment in your check register gives you an up-to-date account balance. The check register reflects the expense, even though the payment is not on your bank statement yet.
A check register helps you know how much money you can spend. By knowing the amount of funds available, you avoid overspending. Overspending can lead you to withdraw more money than you have in your account, or overdraft. Often, updating and reviewing your check register helps you steer clear of overdraft fees.
Reconcile your account
Use a check register for bank statement reconciliation. When you reconcile your bank account, you compare the statement to your check register. You want the balances of each record to match. If the balances differ, you need to adjust the records and check for mistakes.
You might have to add transactions to the check register. For example, you need to add bank fees and interest from the bank statement onto the check register. Also, include unprocessed transactions from the check register on the bank statement.
Once you adjust the balances of each record, the account statement and check register should match.
For a simple way to record all your business’s transactions, try Patriot’s online accounting software. The software uses an easy cash-in, cash-out system. We provide free, U.S.-based support. Try it for free today!