Tips to Avoid Making Costly Bookkeeping Mistakes

by | Oct 13, 2020 | Accounting, Internal Revenue Service

The Most Common (& Expensive) Bookkeeping Mistakes:

Incorrect Payroll Reporting: If you currently have employees and/or plan on having them in the future, then you will need to become very familiar with payroll taxes, inclusive of the various tax forms and remittance schedules. Payroll errors such as miscalculations of employee wages and classification, along with a miscalculation of corresponding taxes owed and errors on required forms are frequent as business owners are experts of their business, however not trained in payroll.

Bank Reconciliation Errors: When you reconcile your bank statement, you are effectively comparing, or cross referencing, it with your bookkeeping records for a certain period, recording discrepancies along the way. This allows you, or your accountant, to be certain your figures and bottom line make perfect financial sense.

If you do your bookkeeping yourself, you should be prepared to reconcile your bank statements on a fixed schedule. If you work with an accountant, such as a CPA,  they’ll handle it for you each month or quarter, depending on your need. Having Accountant Access in place, permits read only account access for finance professionals to certain bank information to help ensure timely and accurate reports. 

Misreporting Income and/or Expenses: Failure to track accurate business costs, potentially mixing business with personal expenses, or comingling of funds, could bring hefty penalties and interests during tax season, putting your business at risk. Recording even the smallest of transactions and coding appropriately ensures accruacy and keeps records clean and up to date.

Lack of Understanding your Accounting System: Having proper reporting in place and thoroughly understanding your software allows for checks, balances and decreases the odds of mistakes. 

Failure to Properly Plan for Tax Season: Tax planning is an ongoing process which is of great benefit to your business. Reviewing your income and expenses and meeting with your CPA or tax advisor regularly allows you to analyze and take advantage of tax credits and deductions that are legally available to you. A lack of tax efficiency will hinder your growth and result in poor business practices over the years, potentially leading to an audit or cash flow problems.

Hiring an experienced finance professional can save your business time and money, while ensuring accuracy and precision of detailed records and reporting. Hiring a CPA means that you will be prepared come tax time, having increased your tax efficiency within IRS guidelines to better serve your bottom line.

Give our dedicated firm a call at (248) 934-0550 if you would like to learn more about our business consulting, tax planning opportunities and Client Accounting Services. 

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