As a small business owner, you know how important it is to keep track of your company’s finances. But, sometimes your business bank statement is not up-to-date with the most current information. For an up-to-date picture of your transactions, you can use a check register. So, what is a check register?
What is a check register?
A check register, or cash disbursements journal, is where you record all of the check and cash transactions your business has during an accounting period. Businesses use a check register to calculate a running balance of their checking account.
Depending on your business’s needs and preferences, you may have a separate business check register for each checking account (e.g., payroll account and operating account check registers).
A cash disbursements journal usually has columns that help you organize and break down transaction information. Typically, the parts of a check register include the following:
Date of transaction Check number or category (e.g., electric bill) Description or notes Debits and credits associated with the transaction Account balance Benefits of using a check register
A check register is an important part of your accounting process. Your register reveals what kind of purchases your business makes and can help you make spending adjustments if needed.
Unlike online bank statements, check registers give you a real-time record of your bank account balance and how much money you have available to spend.
There are many advantages of using a check register at your small business. It can help you:
Avoid overspending Budget better Keep your transactions organized and up-to-date See an accurate balance Track how much you’re spending Find mistakes (e.g., missing check) Reconcile bank statements Check register example
As a business owner, you need to know how to complete a check register. Record transactions in your check register before recording your business transactions in your general ledger.
Update your check register each time you spend cash or write a check to ensure you have an accurate balance.
When filling out your check register, you must know all the details about the transaction, including things like the transaction amount, date of the transaction, and what it was for.
A credit (deposit) increases your cash disbursements journal while a debit (payment) decreases it.
Here’s an example of what one of your business check registers may look like:
Date Description Check Number Debit Credit Balance 8/1/2020 $5,000 8/7/2020 Office expense 123 $200 $4,800 8/20/2020 Electric bill $150 $4,650 8/25/2020 Cash deposit $500 $5,150 8/28/2020 Sales income $250 $5,400 8/31/2020 Supply purchase 124 $100 $5,300
As you can see, you start the beginning of the month with a balance of $5,000. After accounting for income and expenses in your check register, you have $5,300 at the end of the month. Assuming you have a monthly accounting period, the $5,300 balance will become your starting balance at the beginning of the next month.
Check register options
As a business owner, you have a few options when it comes to recording transactions in your check register. You can:
Manually record your transactions on paper Use a spreadsheet Utilize accounting software
Manually creating your check register using a pencil and paper is a good option if you’re looking to save a buck. But, it canContinue reading