Finding & Fixing Business Accounting Software Quirks
Every accounting software program has its quirks. Regardless of the program, it’s important to know how to prevent, find and fix the errors they cause. Not correcting these can yield inaccurate financial records and can cause you to overpay or underpay your taxes at year-end.
So, where do you begin looking for issues? Work through the following items to make sure everything on your books is correct:
Pay close attention when entering your data - especially when you do it directly from the bank feed. Most accounting software tries to be “smart” and guess where you want something to go. Some are better than others at these suggestions. Be sure that when you enter data, you are reviewing these suggestions or automated lines to ensure it’s where you want it to go.
Did you add a new bank account to your software this year? It will often put the beginning balance in as an owner contribution - but if you go back and enter in the transactions that make up that balance, you will have a large discrepancy on your books as to what the balance really is.
Do you transfer money between accounts or transfer money to pay off credit cards? Accounting software can often mess up this transaction, especially if you use the bank feed to enter it.
Look at your accounts receivable and accounts payable. Are those items correct - or did something that was entered incorrectly throw off the balances? If you use linked systems for these items, verify that the numbers match.
Reconcile your bank and credit cards, but don’t just hit the “reconcile” button! Go in and look at the reconciliation report. Are there old items listed that haven’t cleared yet? These can be a sign of duplicate entries or other issues that need to be resolved. Often, duplicate entries are made for both income and expenses by not watching your entries when the software guesses for you.
Run a Profit & Loss Statement for the current AND each of the previous two or three months. Depending on your software, this might need to be separate reports for each month. Compare each of the line items...do the numbers make sense as you go through the months? Do you know what caused the discrepancies? Did the software guess wrong on where things should be categorized?
Run a balance sheet for the current AND each of the previous two or three months. Depending on your software, this might need to be separate reports for each month. Look at the things you own and the things you owe. Do these numbers look reasonable? Are your loan amounts matching what the bank says? If you’re not recording your loan payments properly, you may be missing out on interest deductions!
Did you get or receive forgiveness for PPP loans? What about EIDL loans? Have you recorded all of the details on those correctly?
Having your books cleaned up before year-end (which is fast-approaching!) gives you a better idea of where you really are and helps you make those critical decisions as you finish out the year.
Is this all overwhelming to you? Stuck on just a piece of it or one item on your books? Reach out to us...we’re here to help!