You have decided to reduce your accounting fees by doing the books yourself, but every year you still get a sizeable invoice from your CPA to “correct” them. What you ask yourself is what actually needs correcting and why it takes so long to do it?
There are several common things that need to be corrected before your books can be closed and before your tax return can be prepared. And as you will see, it takes a lot of time to get them fixed!
Many of these errors are actually a result of how easy it is to use the software, which is designed to be flexible and meet a vast portion of the small business market.
The following are the top nine reasons your books are a mess!
- Transactions from one vendor are inconsistently recorded in several different expense accounts.
- Receipts from customers are not posted against outstanding invoices because they have been reported in the system incorrectly.
- Payments to vendors do not offset outstanding bills because they have been reported in the system incorrectly.
- There are multiple variations of customer or vendor names in the system that need to be merged.
- Similar accounts exist to record the same type of transactions–they need to be merged.
- Accounts do not reconcile to third-party supporting documents.
- Accounts have negative balances for a variety of reasons.
- You have “catch all” accounts such as “Miscellaneous”, “Other” or “Ask My Accountant” that have transactions that need to be re-categorized to other accounts.
- You have not captured all of your expenses that were incurred by the end of the year but do not appear on your credit card statement until next year.