Uncashed checks are a pain in the neck for bookkeeping. Instead of being able to reconcile smoothly, there ends up being some checks that haven’t yet cleared your account. It can also make tracking your cash flow more complicated. If you look online, your bank account may indicate you have more money than QuickBooks says you do, and that could be because some of the checks you have written have not yet cleared your bank account yet. In addition to these internal bookkeeping irritations, did you know that as a business you are responsible for reporting any uncashed checks? That’s right! The State of California requires you to report any uncashed checks as unclaimed property after a period of time! Yikes – this all got more complicated quickly…
The State of California requires you to make reasonable efforts to contact the recipient to they ensure they actually receive their funds. If, after attempting to contact the recipient via reasonable efforts you are still unable to locate them and/or get them to cash their check then the business then after a period of time the business must report this as unclaimed property to the State of California. Payroll checks must be reported within one year. Regular checks to vendors must be reported with three years.
There’s a great overview of the requirements and the process here.
So what to do with one more responsibility on your shoulders? Easy! Simply set up a clear routine as we here at ZümiFi have done.
A clear routine includes reviewing any uncashed checks periodically and following up with the recipient once that check goes for a time without being cashed. Then, mark your calendar to submit your annual reporting to the State of California for anything you have not been able to resolve. It may seem like a big burden, but honestly its just a few more steps. Now that you know what you need to do, you just need to take a bit of time to do it! And if you need help, of course, that’s what we are here to do. The best time saver is to just have all the checks cash when they are issued.
Give us a call for strategies on how to keep all of these bookkeeping responsibilities streamline and clean!
We are always here to help!