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The Importance of Documents in Bookkeeping

"All Quickbooks data must match the source of truth. The IRS considers statements (bank, credit card, mortgage), receipts, and invoices to be the source of truth."

As I mentioned in my first "Tax Season" email, your Quickbooks accounts must match all sources of truth. Let's dig into that a bit.


1. For Compliance If you were ever audited, (auditing is the process of examining an organization’s financial records to determine if they are accurate and in accordance with any applicable rules (including accepted accounting standards), regulations, and laws. An audit is only an audit when the kept record is matched to a source of truth aka a statement, an invoice, etc.

2. For Financial Integrity "Trash in, Trash out" as the saying goes. How will you know the true health of your business if the data is not accurate? How will you be able to file accurate tax returns if your data is not accurate? How will you be able to make sound business decisions if your data is not accurate?

What is a source of truth?

The sources of truth is any document that can back any financial record. If you report that your business made $211,987 in 2021, then you better be able to back that up with deposits which can only be found on your bank statement. Or if you stated that you paid $2,345 in insurance on XYZ property, then you need to produce a document from the insurance backing that info. In accounting there's a saying..."If the record is not backed by a source of truth, then it didn't happen."

List of Sources of Truth:

  1. Bank Statements

  2. Credit Card Statements

  3. HUDs (Settlement Statements)

  4. Receipts (Cash or deposit)

  5. Mortgage Statements

  6. Invoices

  7. Insurance Statements

  8. Property Management Statements

So now you know why bookkeepers are always requesting, sometimes begging for statements. In order to reconcile your accounts in Quickbooks, they must have your statements.

I want your books to be as accurate as possible. Really, I want them perfect.

Hopefully I've armed you with enough info to encourage you to 1. Give me access to your bank/credit card accounts if you haven't already or 2. Upload the needed/requested documents to your client portal.

Remember, Bookkeeping has 2 sides...1. Compliance and 2. Business Administration. We must serve both!


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