In the rush of getting accounting tasks done, you may be making some perfectly avoidable mistakes. These errors, however, may wind up becoming costly expenses for your business. If you can eliminate the following accounting mistakes from your practice, you will be doing yourself and your business a great favor–and saving money too!
Recording Transactions in the Wrong Period
Although many software programs are designed to prevent you from recording transactions in an earlier period, it can happen if your software is not configured to block you from making this potentially costly error (Source: https://www.redwingsoftware.com/rwssn/). These errors of data, when caught, must be thoroughly investigated so you can get your accounts in order. By performing periodic balance reconciliations, you should be able to catch these types of errors and fix them before too much time elapses.
Recording Paid Invoices as Deposits
Recording a paid customer invoice as a deposit can lead you to understate sales tax–definitely, a scenario you want to avoid. This mistake happens all too easily. A business owner takes the customer’s check to the bank and then mistakenly marks it as a deposit instead of a paid invoice. To catch these types of errors quickly, you need to make sure that your total sales match your income statement each month.
Paying the Same Bills Twice
By failing to mark a bill paid, you might easily make the mistake of paying for an item a second time. If this is the electric bill, of course, the extra payment will simply place you ahead of the game, but if you are paying other bills twice, you might be out some significant money. Moreover, you will definitely have a headache on your hands when trying to straighten out the mess, because you can’t rely on other venues to have their accounting act together either. They may simply deposit your extra payment as a matter of course.
Misclassifying Business Expenses
When you are in a hurry, it can be all too easy to misclassify expenses as miscellaneous or place them in the wrong categories. This can flub up your budget considerably and paint an inaccurate picture of your business’s expenses. It may help to use software that allows you to categorize your regular vendors. This way expenses can be automatically assigned for fewer errors.
Negative inventory is a common problem for businesses that get bogged down with data entry. Your inventory is supposed to be “received” into the system before it can be recorded as a sale. However, sometimes the received step gets missed, which can lead to the problem of negative inventory. When you wind up with negative inventory, be sure to investigate to make sure you can get your system back on track.
By eliminating these accounting mistakes from your business, you can enjoy more accurate accounting and spend less time trying to figure out the mess that these errors create. When you use reliable accounting software, it can also help you reduce the risk for common errors such as these.