How do I know if my bookkeeping is accurate?
The most reliable test is bank reconciliation. If your bank and credit card statements match what’s in your accounting software, you’ve established that money moving in and out was recorded correctly. That’s the foundation. If accounts haven’t been reconciled in months or the reconciliation shows unexplained differences, your books aren’t accurate.
Beyond reconciliation, look at your financial statements and ask whether they match reality. Does your reported cash balance actually reflect what’s in your accounts? If your books say you have $15,000 in the bank but you know you’re hovering around $8,000, something is wrong. Same with accounts receivable. Pull the list of unpaid invoices. Do you actually recognize those customers and amounts? Are invoices showing as outstanding that you know were paid weeks ago?
Check if recent transactions are categorized correctly. Pick a few purchases from the last month and look at how they were coded. Materials you bought for a job should be in materials expense, not office supplies. That dinner with a vendor shouldn’t be in the same category as your phone bill. Miscategorizations add up and distort your profit picture.
Compare current numbers to prior periods. If your revenue was $50,000 last month and it’s showing $8,000 this month but nothing actually changed that dramatically, there’s likely an error or transactions weren’t recorded. Consistent business bookkeeping should produce trends that match your sense of how the business is performing.
Margins are another reality check. If you’re a contractor and your books show 40% gross margin, does that match your experience? If you know you’re working hard and barely breaking even but the financials show healthy profits, the costs aren’t being captured correctly.
Check your payables list. Are there bills showing as unpaid that you already paid? Are there vendors missing entirely? A reliable accounts payable should reflect what you actually owe and to whom.
The intuitive test matters too. When you look at your financial statements, do you understand what they’re telling you? If the numbers surprise you or contradict what you know about the business, either your understanding is off or the books are wrong. Often it’s the books.
For most small business owners, accuracy comes from consistent processes. Monthly reconciliations, categorizing transactions as they happen, and reviewing the financials regularly. If that’s not happening, errors accumulate. You might not notice them until tax time or when you apply for financing and discover the numbers don’t add up.
If you’re uncertain, have someone qualified take a look. A full-service bookkeeper or accountant can review your books and identify issues you wouldn’t catch yourself. The cost of a review is small compared to the cost of making decisions based on bad data or getting surprised by a tax bill that doesn’t match your records.
Greater Boston's Trusted Bookkeeping Partner
The Next Step:
A Short Conversation
We'll ask a few questions, figure out what you need, and give you a straightforward quote.
More Questions
How do I set up payroll for my small business?
Setting up payroll requires a federal EIN, Massachusetts state registrations for withholding and unemployment, and a system for calculating and depositing taxes on time. Massachusetts also requires Paid Family and Medical Leave contributions that many new employers miss.
Read answerWhy won't my QuickBooks balance match my bank statement?
Mismatches usually stem from timing differences, duplicate entries, or edited transactions after reconciliation. Most can be fixed by checking pending transactions, looking for duplicates, and verifying your opening balance was set up correctly.
Read answerWhy is my contractor bookkeeping so complicated?
Contractor bookkeeping is inherently more complex because you track costs by job and phase, manage timing gaps between deposits and final payments, and handle subcontractor documentation across multiple projects simultaneously.
Read answerCan QuickBooks handle multiple businesses?
Yes, but each business needs its own separate company file or subscription. QuickBooks Online requires a separate subscription per entity, while QuickBooks Desktop allows multiple company files under one license.
Read answerHow much does a bookkeeper cost for a small business?
Small business bookkeeping typically costs $200 to $600 per month for basic services. Actual pricing depends on transaction volume, how many accounts need reconciling, and whether your industry requires specialized accounting like job costing.
Read answerWhat does a bookkeeper do for a small business?
A bookkeeper records transactions, reconciles accounts, categorizes expenses, and produces financial statements that show how your business is actually doing. They keep your records accurate month to month so you have clarity on profits, cash flow, and what you owe.
Read answer