Fractional ControllerThe reconciliations a fractional controller checks each month
You're looking for the list of accounts a fractional controller matches each month, and what each one has to agree with. Tax CFO Steven Palmieri leads this work. Steven and his team treat a reconciliation as a simple test. The books say one thing, an outside record says another, and the two must end on the same figure or the difference must be explained.
Ask what's unmatched
Bank and credit card accounts
These come first because they are the easiest to prove. The books should end on the same balance as the bank statement or the card statement, once you account for timing. A deposit made on the last day of the month may not show on the statement until the next one. A check written but not yet cashed won't have cleared. Both are normal, and both are listed by name so nothing is left as a mystery.
IRS Publication 583 advises a monthly reconciliation of the business checking account, and a business account kept apart from personal money. That advice suits a company of any size.
Loans and lines of credit
A loan balance in your books should match the lender's statement, not last year's memory. We also check that interest sits on an expense line and the principal sits on the balance sheet. When the two get lumped together, profit looks worse than it is and the loan looks smaller than it is.
Payroll liabilities
When a payroll provider runs payday, it also holds back taxes and pays them to the government on your behalf. The books should show those amounts coming in as liabilities and going out when the provider pays them. After a payment, the liability should fall back to zero.
When it doesn't, something is off. Maybe a payment was entered twice. Maybe a filing hasn't gone in. The IRS says an employer stays responsible for payroll taxes even when a provider files them, so a balance that never clears deserves a look.
Sales tax payable
Sales tax collected from customers isn't your money. It's held until it's paid. The balance sheet should show what was collected, what was paid and what is still owed. We match the account to your sales and to the returns that were filed, so the number can't drift away from either.
Undeposited funds and clearing accounts
These are the accounts where old money likes to hide. A customer payment waits there until it's deposited, and then it's supposed to move out. If it never moves, the balance grows and nobody asks why. We clear them to zero or explain what remains.
Owner equity and draws
Money you take out of the business, and money you put in, belong on their own lines. When they blur into expenses, the profit and loss turns inaccurate and your own return gets harder to prepare. Checking this account each month keeps your personal money and the company's money apart on paper, the same way the IRS expects them to be apart in the bank.
What a reconciliation proves
It proves the books agree with something outside themselves. That is a modest claim, and it's a valuable one. It's the reason you can use the month to make a decision. Software screens differ, but the test is the same in every program.
Checked and closed. After the matching, each account on the balance sheet ties to a statement, a lender's letter or a provider's report, and the leftovers are written down by name. See what it adds up to in the monthly statements, or find out how adjusting entries fit in with month-end adjustments in plain words.
Which account in your books do you trust least?
You will be talking to the Steven Palmieri practice.