As you prepare to wrap up your bookkeeping records for your accountant to submit your business income tax returns, be on the lookout for some of these typical errors which might adversely affect your financial statements:
- Recording transactions in a prior period – It is VERY easy to accidentally type in the wrong year when recording your transactions. Doing so will result in the beginning balances for your current year being out of balance as well as missing out on current year expenses. One way to prevent this common error is by closing the books in your accounting software which will signal you when an attempt is made to record a transaction for prior periods.
- Errors of omission – Forgetting to post an entry into your accounting books results in inaccurate financial statement balances and under-reporting of current year expenses. The best way to avoid this issue is by reconciling your bank, credit card and loan accounts monthly and closely reviewing your accounts payable and accounts receivable balances to be sure nothing has been missed.
- Data entry errors – Mistakes can be made when entering data into your accounting books, such as:
– Posting entries to the wrong general ledger account
– Transposing numbers when posting your transaction
– Posting duplicate transactions
It is important to scan through your financial statements each month after your reconciliations have been completed to ensure accurate reporting.
Hiring an outside accountant who can assist with your monthly bookkeeping tasks will help to avoid these common errors. If your business is interested in this type of assistance, please reach out to our knowledgeable RAD team in Williston (802-308-4293) or Rutland (802-775-7132), and we will be happy to help!
Written by Martha Leonard, Bookkeeper, RAD