I still remember the first time I filed taxes for my business. In addition to having no idea what a write-off really was, I also didn't worry too much about guessing on the numbers. A few government audits later, I discovered what it really meant to do things the right way. Over the years, I have met lots of business owners that weren't too worried about fudging the numbers, and nearly all of them have run into problems. Proper accounting is important, which is why I created this website dedicated to business accounting. I know that if you learn the right way to do things and focus on integrity, your business can avoid a world of problems.
Are you trying to organize your finances? One of the easiest ways to organize your finances is to integrate your bookkeeping software directly with your online bank accounts. This pulls all of your transactions into an easy-to-manage system. But there are still some hurdles when consolidating your data like this, including some mistakes which could throw your registry off.
1. Failing to Code Your Checks and Transactions
Not only do you need to track the amount of money you've spent, but you also need to code it properly so you know what you spent it on. When porting in your transactions from your bank, you should review each one to make sure that they have a description that matches. Otherwise you could end up with an inaccurate report of your expenses at the end of the year.
2. Not Looking for Duplicate Transactions
Duplicate transactions can happen when you port information in through an online bank account. You should always review your transactions to make sure that nothing looks identical; if you see two identical transactions on the same day at the same place, you know that it's very likely you have an extra charge.
3. Waiting to Enter In Your Checks
Your cleared checks will be brought in through your online banking account -- and if you've already entered them in with the appropriate check numbers, they won't be duplicated. But that's just your cleared checks. If you haven't entered in your checks yet, your uncleared checks won't be brought in through your online bank. This means you could quickly lose track of how much money you have outstanding.
4. Not Reconciling Your Accounts
Porting in your information isn't enough to make sure that it's accurate. You still need to perform an account reconciliation. An account reconciliation means that you need to check off every deposit that you made and every item expense. Once you've done that, the account balance should reflect the balance on your statement. Accounts are usually reconciled every month, though you can do it by year if you don't need it as frequently. Reconciling is the only way to make sure the transactions are actually accurate as a whole.
Sometimes it's best to have a professional bookkeeping service or accountant like Joseph Hanlon, CPA set up your file initially. They can then train you on how to enter in your transactions and code them properly, so you have all the information that you need for your income and expense reports or tax statements.Share
6 June 2016