How to Manage Transactions With The ReInvestWealth Software
It is highly important to keep track of your business cash flows. It is recommended to review your transactions regularly—ideally, once a week or at least once a month because you’ll get a clearer view of where your money is going. To keep things as easy as possible, ReInvestWealth software follows cash-based accounting rules. This means that your bookkeeping will update when money leaves or enters your bank accounts.
Categorization
Your responsibility is to ensure that your transactions are categorized correctly, and the AI Bookkeeper does an excellent job at helping you in this process. There is a lightning icon next to the transactions that have been categorized by the AI Bookkeeper.
If you would like to make any changes, simply click on the category itself. In the ReInvestWealth software, we have separated our categories into different cash flow groups. It starts with Expenses, then Revenues, then Taxes, followed by Financing and then Investing activities.
Operating Expenses
Advertising & Marketing: Includes costs related to ads, branding, promotions, and gifts aimed at enhancing visibility and driving sales.
Delivery & Shipping: Covers transportation and distribution costs for delivering goods or services to customers.
Donations: Charitable contributions made by the business.
Insurance: Costs associated with insuring the business, employees, or assets.
Interest & Bank Charges: Includes fees for payment processing, loans, credit lines, and general banking services.
Inventory Purchase: Costs incurred for purchasing goods for resale or production materials.
Office Expense: Covers office essentials like stationery, keyboards, or other business tools.
Meals & Entertainment: Expenses for business meals, catering, and events aimed at networking or team building.
Payroll: Employee compensation, including salaries, wages, and related benefits.
Professional Fees: Costs for hiring freelancers, sub-contractors or professional services such as legal, accounting, or consulting.
Rent Expense: Payments for office or operational space leases.
Repair & Maintenance: Costs to maintain or repair equipment, buildings, or other assets.
Research & Development (R&D): Expenses for innovation, product development, or process improvement.
Subscription Fees: Recurring costs for software, memberships, or online tools.
Trainings & Courses: Investments in education, books, or conferences.
Travel: Business-related trips or transportation. Can include airfare, hotels, public transit, taxi, uber, etc.
Utilities: Basic services like electricity, water, internet, and phone.
Vehicle Lease: Leasing costs for business cars or other vehicles.
Vehicle Operating Costs: Includes fuel, maintenance, and charging costs.
Other Expense: Any other expenses not covered in the above categories.
Operating Revenues
Sales Revenue: Income generated from the sale of goods or services.
Subsidies & Grants: Funding received from government or other organizations.
Tips & Bonus: Additional income such as tips, bonuses, or commissions.
Other Revenue: Miscellaneous income not categorized above.
Income Tax & Sales Tax
Income Tax Payments, Refunds & Installments: Payments or refunds related to business income taxes.
Sales Tax Payments, Refunds & Installments: Sales taxes remitted to the government or refunded from the government.
Financing Activities
Common Shares: Issuance or management of company equity.
Dividend Issued: Profits distributed to shareholders.
Due to Shareholder: Funds owed to business owners.
Loans Payable: Borrowed funds and repayment of borrowed funds.
Loans Receivable: Funds lent out by the business and repayment of funds lent out.
Other Financing Activities: Any other financing-related transactions.
Investing Activities
FX Gain/Loss: Gains or losses from currency exchange fluctuations.
Investment Income: Returns from investments such as stocks or bonds.
Property, Plant, Equipment: Costs for acquiring or maintaining fixed assets like laptops or furniture.
Research & Development Asset: Investments in innovation-related assets.
Vehicle Purchase: Acquiring vehicles for business use.
Other Investing Activities: Miscellaneous investment-related activities.
Other Categories
Interfund Transfer: Transfers between different accounts or funds within the business.
Automation Formulas
You can also setup automation formulas if you have any specific transactions. For example, if you send money to John, who handles your marketing, you can simply go to Automation Formulas, click create formula, add the name as it would show up in your transactions. In this case you may put “Transfer sent to John”, then you select the category “Advertising and Marketing”, under Expenses. Once you create this formula, any future transactions that have the words “Transfer sent to John, will be categorized as Advertising. You can also apply this formula on all your previous transactions, if needed.
Exporting Transactions
You can also export your transaction list to excel. Simply choose the time frame in the transaction page and click on Export. you’ll even have the option to download a report with your receipts.
The Importance of Reviewing Transactions
Reviewing your bank transactions regularly plays a vital role in effective bookkeeping. Here's how it can significantly impact the accuracy and efficiency of your bookkeeping process:
1. Ensures Accurate Record-Keeping
When you review your bank transactions in the software, you can ensure that every transaction, whether income or expense, is properly recorded. This helps maintain accurate books and prevents discrepancies between your bank account and your financial records.
2. Improves Cash Flow Management
Through regular review of bank transactions, you gain better visibility of your cash flow—how much money is coming in and going out of your business. This helps you understand your financial position more clearly and enables better decision-making when it comes to managing expenses, investments, or savings.
3. Facilitates Tax Preparation
Good bookkeeping is crucial when it comes to taxes, and reviewing your bank transactions regularly helps ensure that you’re ready for tax season. By keeping accurate records of your income and expenses, you’ll have a clear audit trail for tax deductions and credits.
Frequently Asked Questions
How often should I review my bank transactions in accounting software?
It’s recommended to review your bank transactions at least once a week. However, if you have a high volume of transactions, you may want to review them more frequently. Regular checks help catch errors early and keep your financial records up-to-date.
Can ReInvestWealth software automatically import my bank transactions?
Yes, ReInvestWealth, allows you to connect all your business bank accounts and automatically import transactions. The AI Bookkeeper feature streamlines the bookkeeping process and reduces manual data entry.
Can reviewing my bank transactions help with tax reporting?
Absolutely! By regularly reviewing your bank transactions, you’ll ensure that all income and expenses are accurately recorded, which makes tax preparation much easier and reduces the risk of errors during filing. It also helps you to maximize your tax deductions.
What should I do if I notice a discrepancy between my bank statement and the ReInvestWealth accounting software?
If you notice a discrepancy, investigate both the bank statement and your accounting records to identify the source of the difference. Submit a ticket to ReInvestWealth with these details to fix the discrepancy.