Summary Points:
Bookkeeping & Accounting Oversight
- Know your chart of accounts (your financial skeleton)
- Review coding of transactions monthly
- Check the bank reconciliation each month
- Review your financial statements monthly
- Stay in touch with A/P and A/R reports regularly
- Review payroll vs. percentage targets
Tax & Compliance Responsibilities
- Maintain receipts and audit trail
- Stay on top of quarterly taxes and filings
The Situation:
In a recent conversation, a business owner shared frustration about her accounting and bookkeeping—specifically, what she needed to be involved in versus what her internal bookkeeper and outside accountant should handle.
To simplify this, I shared a clear framework outlining the key areas an owner should oversee versus what can be delegated.
First, as the owner, you need to understand your chart of accounts. This determines what your financial statements look like—it’s the skeleton of your financial model. You don’t need to code transactions yourself, but you do need to understand how everything is categorized so you can read and interpret your numbers.
Second, while your bookkeeper can handle coding transactions from bank and credit card statements, it’s important to review that coding at least once a month. If you have a highly experienced and trusted bookkeeper, this can be delegated more fully, but a monthly review helps ensure expenses are going into the correct buckets.
Third, you should review your bank reconciliation monthly. This allows you to see deposits, checks, withdrawals, outstanding items, and anything still in transit. Overseeing the reconciliation of cash is one of the most important responsibilities you have as an owner have. You do not have to do the bank reconciliation but reviewing, overseeing it will allow you to be in touch with where those key cash flow items are.
Fourth, once everything is completed, you’ll review your financial statements. This is where you assess overall performance and quickly identify anything that looks off—whether it’s an unusual expense, a miscategorized item, or a percentage that’s out of line.
You also want to stay consistently in touch with your accounts payable and accounts receivable reports. This means reviewing them on a weekly—and even daily—basis so you know what’s coming in, what is going out, and where things stand. That does not mean you need to run the receivables, send invoices, or manage payables, but you do need to regularly review these reports so you always have a clear picture of your cash flow, and what coming in and out.
The same applies to payroll. You don’t need to run payroll, but you do need to review it—especially to ensure wages stay aligned with your target percentages based on sales and identified in your budget.
Tax & Compliance:
Finally, on the tax and compliance side, you as the owner must make sure receipts and audit trails are maintained. This is great task you to delegate as soon as you can. You as the owner also need to make sure you are making quarterly estimated tax payments, and ensuring tax filings are completed on time.
In Conclusion:
By following this framework—knowing your chart of accounts, reviewing coding, checking bank reconciliations, staying in touch with A/P and A/R, and reviewing financial statements—you stay involved at the right level without getting buried in the day-to-day work and details. This way you do not lose track of the forest through the trees, as happens sometimes when buried in the nitty gritty bookkeeping!
This creates clarity between you, your bookkeeper, and your accountant, and ensures you have the reporting system in place each month to manage and grow your business more profitably.
Make sure to check out our other executive summaries on how to set up the reporting systems needed to generate the financial statements and reports required to run your business more profitably, or contact us for a discovery call so we can help you directly.
