FAS | Blogs, Ideas, Tips, Tricks, Videos for Small Business | Bookkeeping and Tax Services Firm in Katy and Houston, TX

Warning: 5 Ways Incompetent Bookkeepers Can Ruin your Business' Financial Records

2018-01-19 12:32:43.0

| Author: FAS

FAS specializes in small business bookkeeping and tax services. We work closely with small businesses in Katy, Fulshear, Houston and nearby areas. Call us for Free Consultation: 832-437-0385 .






 

     We can guarantee you that bookkeeping done wrong could cost you closing down your business. That’s a fact and not something made up to sell a service. The most important for a small business owner to realize is that bookkeeping is the foundation of your business success. When you entrust your books to the wrong bookkeeper, you have to be prepared to spend more or embrace the reality that your business lives on a shaky ground and could fall at any time. It’s always wise to strengthen the foundation of your business success.

      Here are some warning signs to know if you hired an incompetent bookkeeper for your company.

 

1. Failing to Keep an Accurate Accounts Receivable Aging Report

     Accounts receivables represent products or services you have provided to your customers but still uncollected, which affects your business’ profitability and cash flow.  This is one of the most important reports and internal control procedures that your bookkeeper should be closely looking at.  Your business may be going great recently, clients may be coming in easily and are fully satisfied with your products or services, but none of this would produce a great outcome for your business if the accounts receivable aging report is not accurate and updated. Long outstanding receivables that go unnoticed due to inaccurate or incomplete recording could hurt your business more than you can expect it.  Make sure that you review this report weekly or monthly, depending on your business, and be sure to follow-up with your bookkeeper if numbers don’t make sense.

 

2. Small Transactions are Ignored

    There might be a certain threshold for keeping receipts but a good bookkeeper will always remind you to keep all receipts for expenses whether it is for a huge or small transaction. It is a good practice to be thorough with keeping track of all your expenses most especially the small ones. A great bookkeeper should not ignore these small expenses and make sure these are all recorded on the books. 

 

3. Expenses not coded correctly

     The bookkeeper should know how to properly classify company disbursements to the appropriate expense category.  If these are not recorded correctly, you not only run the risk of having inaccurate and misleading financial information but you may not be maximizing business deductions for your business.  Case in point, if your bookkeeper codes a fuel to meals and entertainment, you are losing 50% of business deduction as fuel is 100% tax deductible expense while meals and entertainment is only 50% tax deductible.  The impact to the business is you are paying more tax than you should due to incorrect coding of expense by your bookkeeper.

 

4. Incorrectly classifying direct labor costs to overhead cost.

     Just like categorizing expenses, your bookkeeper should know the importance of classifying disbursements between Direct Costs which is part of Cost of Goods Sold and Indirect Costs which is below the gross margin line.   If costs and expenses are not properly classified, the business owner run the risk of pricing their product or service incorrectly as the cost to which they based their decision is inaccurate.

 

5. Monthly reconciliation is not prepared or prepared incorrectly.

     Some bookkeepers often ignore this most important bookkeeping task, so make sure that your bookkeeper is not one of them. Reconciliation should be done monthly by your bookkeeper to avoid incomplete or inaccurate financial report.  When you see aging outstanding items representing uncleared transactions in your bank reconciliation statement (uncleared deposits, outstanding checks with age over 6 months or one year, etc.), these are signs that your bank reconciliation is not being done correctly by your bookkeeper.

 

     In summary, don’t hire the wrong people to do your bookkeeping. 

     Find the professional ones who can really help you set up your system and record your transactions properly and correctly. Remember to go back to your objectives. Get help where you need it. And when you get help, choose the qualified professionals who know what they are doing. Not some amateur or worst incompetent bookkeeper just because they offered you the cheapest bid for the job and you are trying to cut costs. Remember, you get what you pay for.

 

If you need help with your bookkeeping and tax preparation for your company and wants to avoid incompetent bookkeepers, contact us today at cristy@fas-accountingsolutions.com or 832-437-0385. We surely won’t let you and your business down.

 

 


We help you plan, forecast and analyze your financial data
so you can get on top of your finances today to grow your
small business big tomorrow.

2018 Q3 tax calendar: Key deadlines for businesses and other employers

READ MORE

Infographic: Tools to help you reach major financial goals.

READ MORE

10 Tips to Remember to Achieve A Sound Financial Management Process for Contractors

READ MORE

Make New Years Resolutions to Improve your Small Business Profitability

READ MORE

Basic Bookkeeping Tips and Tricks for Startups

READ MORE

Small Business Bookkeeping Quick Guide: Easy Steps To Success

READ MORE

9 Essential Bookkeeping Practices For Small Business

READ MORE

3 Reasons why Keeping Accurate Records is a Must for your Business

READ MORE

3 Major Financial Statements Your Business Should Have

READ MORE

5 Small Business Bookkeeping Pains That Need Qualified Temporary Staff

READ MORE

7 Bookkeeping Mistakes You Should Never Make

READ MORE

How Simple Bookkeeping Mistakes Cripple Dental Clinics in the US

READ MORE

Petty Cash Risks and Controls Best Practices Preventing Small Business Fraud

READ MORE

Cutting Costs When You Have Gone Over Budget

READ MORE

10 Tips to Achieve a Stress-Free Year-End Financial Closing and Tax Preparation for your Medical Practice

READ MORE

The Secrets of Budgeting: 6 Steps to Develop a Perfect Budget Plan for Your Non-Profit Organization

READ MORE

Not Necessarily a Luxury: Outsourcing

READ MORE

Big Data Strategies for Every Business

READ MORE

Meals, Entertainment, and Transportation May Cost Businesses More Under The TCJA

READ MORE

Don't Do These 8 Things If You Want to Have a Healthy Cash Flow for Your Business

READ MORE

How to Feel Secured: 5 Questions to Ask Before Hiring Your Next Outsourced Bookkeeping Service Firm

READ MORE

Business Interruption Insurance Can Help Some Companies

READ MORE

What Every Non-Profit Must Have for Financial Stewardship and Accountability

READ MORE

What You Don't Know Can Hurt You: How to Avoid Trust Account Violations for Lawyers

READ MORE

Your Construction Business May Not Be Doing as Well As You Think Due to Inaccurate Financial Information

READ MORE

4 Cost Centers That Every Medical Practitioner Must Monitor & Control to Be Profitable

READ MORE

It's Time to Get More Creative with Retirement Benefits Communications

READ MORE

7 Quick Ways to Avoid Common Bookkeeping Mistakes for Nonprofit Organization

READ MORE

7 Ways To Prepare Your Business For Sale

READ MORE

4 Common Financial Mistakes You Should Avoid for The Benefit of Your Medical Practice

READ MORE

Building A Sales Prospect Pipeline for Your Business

READ MORE

Infographic: Under the New Tax Law You Can't Deduct Hobby Expenses

READ MORE

Do You Make These 4 Common Construction Bookkeeping Errors?

READ MORE

Home Vs. Away: The Company Retreat Conundrum

READ MORE

4 Tips on How to Avoid Common Pitfalls of Bookkeeping for Legal Firms

READ MORE

Tips on Costs Reduction That Every Non-Profit Organization Should be Aware of

READ MORE

L.E.A.R.N. to Earn: How Can Medical Firms Cut Costs

READ MORE

Tips on How to Reduce Your Law Firm's Overhead Costs

READ MORE

Fun fact: What's the connection between the dollar and the Spanish peso?

READ MORE

Four Ways to Reduce Overhead Costs and Increase Profits in Your Construction Business

READ MORE

Manage Health Benefits Costs With A Multipronged Approach

READ MORE

Do you Really Know How Much your Product Cost? You May be Surprised!

READ MORE

No Harm, Just MEDICINAL: 9 Benefits of Outsourcing Your Bookkeeping

READ MORE

Cost Control Takes a Total Team Effort

READ MORE

How to Set Up An Accountable Plan

READ MORE

Should I Outsource? 7 Advantages of Outsourcing the Bookkeeping Tasks of Your Construction Business

READ MORE

Putting Your Child on Your Business' Payroll for The Summer May Make More Tax Sense Than Ever

READ MORE

Putting Your Child on Your Business' Payroll for The Summer May Make More Tax Sense Than Ever

READ MORE

Money Management: 5 Tips to Benefit Your Solo Law Firm's Bottom Line

READ MORE

6 IRS Audit Red Flags That Your Medical Practice May Be At Risk

READ MORE

3 Keys To a Successful Accounting System Upgrade

READ MORE

How to Avoid Getting Hit With Payroll Tax Penalties

READ MORE

5 IRS Audit Red Flags for Construction Business that You Need to Know and Avoid

READ MORE

Choosing The Best Business Entity Structure Post-TCJA

READ MORE

Take H.E.A.R.T.: How to Maximize the Limited Resources of Your Nonprofit Organization

READ MORE

7 H.E.A.L.T.H.Y. Financial Management Tips for Your Medical Practice

READ MORE

How to Make Sense of your Business' Financial Information

READ MORE

CONTACT US

Address | 810 S. Mason Road, Ste 160, Katy, TX 77450
Office | 832-437-0385
Email | admin@fas-accountingsolutions.com

Follow us:         

  
Type the characters you see in this image.