Easy Ways to Spot Bookkeeping Errors and Make Corrections

Not all business owners have a background in accounting or bookkeeping. That is why many hire small business bookkeeping services and other accounting-related solutions.

However, even with the help of professionals, it is essential to keep track of your finances to ensure your business is running smoothly. This involves checking for bookkeeping errors and making corrections when necessary.

If you need help with how to do it, we have some tips for you! Below are some ways to spot bookkeeping errors and make corrections if you are a business owner.

Review Your Financial Statements Regularly

Reviewing your financial statements regularly is essential even when you hire a bookkeeper in NYC. These statements include your income statement, balance sheet, and cash flow statement. By reviewing these, you can identify any inconsistencies or errors in your bookkeeping.

For example, if your income statement shows a sudden increase or decrease in your revenue, it could be an indication of an error. You should investigate the cause of this discrepancy and make corrections if necessary.

Check Your Bank Statements

Your bank statement shows all the transactions that have taken place in your account, including deposits and withdrawals. By comparing your bank statement with your accounting records, you can identify any discrepancies.

If you notice any transactions that were not recorded in your accounting system, it could be an indication of an error. You should investigate the cause of this discrepancy and make corrections if necessary.

Verify Your Accounts Receivable and Accounts Payable

Accounts receivable and accounts payable are critical accounts you should verify regularly. Accounts receivable refers to the money owed to your business by your customers, while accounts payable refers to the money your business owes to your vendors or suppliers.

By verifying these accounts, you can identify any errors in your bookkeeping. For example, if your accounts receivable balance is higher than it should be, it could indicate that some of your customers still need to pay their invoices. You should follow up with them and make corrections to your accounting records.

Similarly, if your accounts payable balance is higher than it should be, it could indicate that you are yet to pay some of your vendors or suppliers. You should follow up with these vendors and fix your accounting records.

Look for Duplicate Entries

Duplicate entries are another common bookkeeping error that you should watch out for. These can occur when the same transaction is recorded more than once in your accounting system. For example, you may have recorded a sale twice, resulting in an overstatement of your revenue.

To spot duplicate entries, you should review your accounting records carefully. Look for transactions that appear more than once and investigate the cause of these duplicates. Once you have identified them, correct your accounting records.

Check Your Chart of Accounts

Your chart of accounts lists all the accounts used in your accounting system. It provides a framework for organizing your financial transactions. By reviewing your chart of accounts, you can identify any errors or inconsistencies in your bookkeeping.

If you notice that some accounts are missing or mislabeled, there might be an error. You should review your chart of accounts carefully and make corrections if necessary.

Make Corrections in a Timely Manner

Once you have identified bookkeeping errors, it is essential to make corrections as quickly as you can. This involves updating your accounting records to reflect the correct information. The longer you wait to make corrections, the more difficult it becomes to identify the cause of the error and correct it.

Conclusion

In conclusion, spotting bookkeeping errors and making corrections is essential for any business owner. This ensures the accuracy of your financial records and helps your business run smoothly.

Business owners can check their records even when hiring an accountant or bookkeeper in NYC. This does not mean distrust; rather, it is a way to understand the flow of your finances and deliver better service to both suppliers and consumers.

If you are looking for bookkeeping services in New York, turn to Totally Booked. We offer all aspects of bookkeeping, including accounts payable/receivables, budgeting, payroll, app integrations, and more.