We might be in the tail-end of spring, with many business owners having closed last year’s books, filed their taxes, and moved on, but this time of year is actually ideal for cleaning up QuickBooks.
From missed tax deductions, and cashflow catastrophes, to headaches during tax season, small bookkeeping problems that are either invisible now, or which may appear innocent-looking, can creep up and bite you later in the year if not taken care of early enough.
Here’s why bookkeeping services in Miami recommend that small business owners focus on the following during March and April:
Spring is when many QuickBooks issues show up
When businesses are closing their books from the year prior, getting documents together to prepare their taxes, reconciling accounts for year-end, and issuing 1099’s, the dust begins to settle and problematic patterns for the year ahead, start to rear their head, such as:
- Wrongly categorized expenses
- Transactions that are missing or duplicated
- Balances remaining uncleared for months
- Inaccurate reports
March is late enough in the year to see where these problems are, but early enough to get them fixed before they turn into bigger problems.
Here are some of the most common problems with QuickBooks seen by bookkeepers in the spring:
- ‘Ask My Accountant’ is full
Designed to be temporary, many businesses leave transactions in this account indefinitely, which could lead to expenses not being deducted correctly, and inaccuracies in financial reports. Clean the account out in March or April.
- Bank feeds aren’t reviewed fully
While automation can be helpful, if a business constantly relies on bank feeds without taking the time to review every transaction, it can lead to expenses being misclassified, duplicate income entries, and personal transactions appearing in the businesses books. Just one bad habit that repeats every month can make financial reports become distorted.
- Reconciliations get left behind
If accounts are only reconciled at year-end, or skipped altogether, this can leave duplicate charges, missing deposits and incorrect balances. March and April are the ideal time to swap to monthly reconciliation.
- Balance sheets don’t make sense
While many business owners take the time to review their P & L statement, they often ignore the balance sheet. If continuously neglected, it can lead to loans being incorrectly recorded, negative asset balances, and equity entries that are uncategorized. For your P & L statement to make sense, your balance sheet must also make sense, and fixing it at this time of year can help prevent problems such as missed deductions, inopportune tax planning, costly clean-up work and decisions about cashflow that are based on pure guesswork.
What you can do right now as a business owner:
For any owner of a business who also uses QuickBooks, spring is a fantastic time to do the following:
- Check how accurate financial reports are
- Carry out account reconciliation through February
- Tidy up transactions that haven’t been categorized
- Separate personal activity from business
Even one small but focused session of QuickBooks cleaning can prevent a whole lot of stress later on in the year, and make the job of your tax accountant in Miami a lot simpler.
QuickBooks is wonderful when it comes to number-tracking, but it doesn’t have the ability to evaluate them. For example, it won’t tell you if your margins are starting to slip, you’re not spending enough on your estimated taxes, or your pricing needs to be adjusted. But by catching QuickBooks problems early in the year with professional guidance, you can enjoy accurate reporting, make smarter decisions, experience fewer unpleasant surprises, and feel less stress during tax season.