When running a small business it can be tempting to use your credit card or checks for those every day expenses without considering how quickly they can add up. You may find yourself checking your balance every few days to make sure that you have enough in the account to cover any spending. Many feel they are at risk of having an overdrawn checking account. Chances are that you are not balancing your checkbook each month or you are not keeping a running balance of your account. This is the only accurate way to keep track of the money that is in your account.
When you write a check it may take some time for it to clear. The person you wrote it to might not immediately take it to the bank and deposit it. Additionally the bank has to send it through the clearinghouse so that the money can be transferred from one bank to another one.
Even your debits may take a few days to clear. With a debit transaction the merchant places a hold on the money, which can drop after a few days. They place to hold to verify that you have funds at the time of the transaction, but then the merchant needs to send all of its debit transactions to the bank to be processed. If the merchant doesn’t do this every day the debit may drop off, and not show that it has been taken from your account.
It is your responsibility to track your spending both for yourself and your customers, and to keep yourself from overdrawing your account. It is not a difficult process, but it can be time consuming if you do not do it every day. You can either use the ledger book that your bank has provided or you can use a software program for your computer, your handheld device, or your cell phone. Each day you need to enter in each purchase that you have made, and subtract it from the total of your account. If you have made any deposits than you add it to your running balance. Balancing to your statement each month should help you catch any addition errors you have made, and any transaction you may have missed.