If you use bookkeeping software to prepare your financial statements in-house, then you're probably counting on it saving you money to make up for all of the time it takes you.
What happens when it doesn't? Record inaccuracies can result in fees down the line or make you miss out on reimbursable expenses. It can be easy to not even realize you're getting lost if you don't have a background in accounting.
How can you tell if your bookkeeping is getting mixed up? Start by taking a look at your financial statements.
Self-preparation methods of accounting and bookkeeping, such as through a software like QuickBooks or Xero, are widely used. You might find that using your system in-house is time-consuming, but it can also be confusing. Do you know what to be keeping an eye out for?
The Common Red Flags on Financial Statements
- Negative balances*
- Officer loans
- Income on Balance Sheet doesn't agree with Income on Income Statement/Profit & Loss Statement
- Titles such as "Forced Total", "Suspense", and "Clearing Account"
*A negative balance is by far the most common red flag that pops up in small business financial statements.
Financial Statement Basics
Let's take a step back. Surely if you've been working on your own bookkeeping, you might know a thing or two about your financial statements. However, if you'd like to brush up on the basics, we've put together some resources for you in the form of both blog posts and a downloadable kit.
Here are some great informative blogs about your financial statement basics. While one is restaurant-specific, you can apply it to other industries as well!
- Why are Balance Sheets Important for Small Businesses?
- What to Include in a Restaurant Profit & Loss Statement
Don't forget about our Small Business Accounting Kit for tax season! It includes a pamphlet about three essential financial statements and what they can tell you about your business.
How else can CSI Accounting & Payroll help?
Don't trust just anyone with your business! CSI Accounting & Payroll can guide your finances on a monthly basis and help you avoid common in-house accounting errors that are often missed by small business owners.
Our team members are Certified QuickBooks Pro Advisors and Xero Pro Advisors. We are committed to helping our clients efficiently and effectively use these tools to achieve valuable insights into business performance.
We take over your financial bookkeeping and provide you with monthly reports. By hosting your QuickBooks file, we won’t have to email files back and forth. We also regularly review your accounting information for accuracy, and we balance your books and bank accounts!
Did we convince you yet? Click the button below for a free consultation to see if we're a good fit for each other.