How can I ensure accurate bookkeeping?

Overview 

Accurate bookkeeping is essential to managing your private practice finances. At Heard, you'll work with a dedicated bookkeeping team to account for your private practice income and expenses throughout the year.

How can I ensure accurate bookkeeping?

There are three steps to ensure accurate monthly bookkeeping on your part, and it should take only a few minutes of your time. 

1. Upload bank statements 

In order to reconcile your monthly books, your bookkeeper will need your monthly bank statements for each of your business bank accounts. Reconciliation is a monthly bookkeeping process where your bookkeeper reviews your monthly transactions with your bank statements. By regularly comparing your transactions to your bank statements, we can identify and resolve discrepancies, maintain up-to-date records, and provide a clear picture of your financial health.

As a reminder, only business accounts should be connected to your Heard account. Once your statement becomes available, please upload it to your Heard account at Your Practice>Documents>Bank Statements.

Please note: You can automate this step by providing Heard with automatic statement upload or limited bank access to your bank account statements. To read more, see Bank Statements at Heard.

2. Review Transactions

When your transactions are missing information or the tax compliant category is unclear to your bookkeeper, the transaction will be marked as "Needs Review". For example, a transaction from Amazon does not describe what was purchased and your bookkeeper will mark for your review. 

If there are transactions that need your review, you will receive a notification.  You can find these transactions in Bookkeeping>Transactions>Needs Review. 

For each transaction that needs review, please select: 

1. Type - Business or Personal
2. Category - search for the category if you are sure
3. Additional information - Click the three dots to the right to provide more information about the transaction, and your bookkeeper will update to the appropriate tax compliant category:
   • View Details
   • Upload Receipt
   • Add Note
   • Mark as Duplicate

Below is a walkthrough video from Melissa from the Heard Engagement Team on reviewing transactions. 

3. Review Monthly Report

Once bank statements are available and you have updated any transactions that need your review, your bookkeeper will categorize and reconcile your books. 

We recommend you spend some time reviewing your monthly Profit and Loss statements by going to Insights>Monthly Reports.

Frequently Asked Bookkeeping Questions

Do I need to upload receipts for every transaction? 

Heard does not require you to upload receipts for every transaction. This feature is simply for your own safekeeping. In the unlikely event of an audit, the IRS requires receipt of any business purchase of $75 or more. 

How long should I save receipts?

The general rule of thumb is to keep business receipts for as long as the IRS can audit your records. Usually, the IRS audits three years' worth of records. Keep your business receipts for at least three years in case you need to show proof of purchases or sales.

Note: Heard will request receipts at year-end for any assets purchased over $2,500, as these are required for annual taxes. 

Why are monthly statements required?

In order to reconcile your monthly books, your bookkeeper uses the monthly bank statement to ensure that month-start and month-end balances match what we have in your books. With the Plaid platform syncing your bank transactions to your Heard account, we want to ensure that all transactions are captured in this process. This enables your bookkeeper to confirm and reconcile.