5 most common accounting software mistakes
We see a lot of data files and have noticed that many of them have some or all of the following issues. Without wanting to bore you to tears with all the details, here are five of the most common mistakes people make. Do any (or all) of the following resonate with you?
1. Not reconciling accounts
This tops the list. Without reconciling all of your accounts you have no assurance that what is in the account register is correct. Make sure you reconcile not just bank accounts but assets and liabilities, including loans. Doing this ensures the integrity of your accounts
2. Not using credit card accounts (or using them inconsistently)
Often people don't enter their credit card transactions. When making a payment to the credit card from their business cheque account they expense it to an account called credit card or itemise the expenses in the write cheques window. Just like a cheque account every charge should be entered into the credit card register and payments to the account are just a transfer of funds from the cheque account to the credit card. Unless all transactions are entered you can't be sure you are claiming all expenses (and GST).
3. Not reviewing the profit and loss
A lot of business owners fail to review their Profit and Loss. This report can provide valuable insight into the health of your business. It can also be a great tool to review your data file for mistakes. With the Profit and Loss you can compare previous periods to ensure income and expenses seem in line with the norm, if they don't find out why. Often it's as simple as improper coding but could also uncover valuable information regarding your business trends.
4. Not reviewing the balance sheet
Just like checking your Profit and Loss, reviewing the Balance Sheet can provide some serious insight into the health of your business. Balance Sheet items reflect the current balances on your assets (including bank accounts) and liabilities (including loans). Check your statements for these accounts to ensure they match, if not find out why.
5. Using too many accounts and sub accounts
Often charts of accounts can have too many accounts and/or sub accounts. All this detail is not necessary, in almost every case less is more when it comes to your chart. Keep it simple, you'll save time and still produce meaningful reports.
If you need any help or advice with this, give us a call on 578 3386 or firstname.lastname@example.org.