This article was originally posted on Halon Tax and written by Jodi Hesse.
Year-end tasks can be time-consuming and stressful when the books are incorrect.
The best practice is quite simple… be thorough and accurate throughout the year to prevent the errors before they occur. Unfortunately, this is easier said than done.
Which is why I (as a bookkeeper myself) wanted to go over some of the most common errors and issues, and how can you prevent them.
You can trace errors back from the simplest to the most complex tasks… but thankfully, your ability to prevent them is the same.
Vigilance. Constant vigilance.
The majority of the time, these errors are either due to a lack of attention to detail or to a lack of knowledge and training. Add in busy schedules, heavy task loads, and distractions… it’s a perfect storm to negatively impact the quality of anyone’s work.
In bookkeeping, however, it is especially imperative that you prevent errors before they happen as it will save you and your client’s countless headaches later on.
First Up… Communication Issues.
As bookkeepers, we often have issues getting our clients to communicate in a timely and effective manner. These communications often involve expense categorization questions, receipt backups for expenses, payroll questions, and other important details.
It’s essential to discuss with your clients the importance of timely and effective communication. Make it a point to meet with each client and explain why you need your emails answered and phone calls returned (don’t be afraid to use detail). Usually, business owners are excellent at what they do, but they don’t understand the importance or complexity of what you’re asking from them. Their days get too busy, and procrastination can get the best of them.
Additionally, your client needs to understand precisely what it is that you require from them. Make sure you’re clear with what you need and when you need it by. Use layman’s terms, not accounting language. Often the disconnect between parties is as simple as a lack of understanding.
Real Life Example: Deductible Expenses
Explain to your clients why maintaining their receipts is essential and sending them to you to attach to their QBO account effects the size of their tax bill. If they understand how serious this is (and how their money is effected), they will be more inclined to follow through.
Educate Your Clients!
Did your client write a check to a sub-contractor and you don’t have the W9 to go with it? Yikes! Make sure that you let your clients know right away what they need to get to you. Many small business owners don’t understand what they need at the year-end, and the better you communicate what’s expected in advance, the easier tax season will be for everyone.
Uncategorized Expenses and Income
Uncategorized expenses and income are usually less of a problem the better the communication is with the client. When your clients have entries that are unfamiliar, you must confirm what the expense was for, or how the income should be categorized. Do not guess. Guessing won’t help anyone.
This type of situation needs to be addressed promptly, and not left until the end of the year. Do you remember the reason for your expenses 3 months ago, how about in January? No? Then you shouldn’t expect your client to remember either. Avoid the stress and ask for clarification when questions come up.
The importance of reconciling accounts isn’t always as obvious as we sometimes think it is as bookkeepers.
Reconciliation ensures all transactions are accounted for and confirms that bank feeds came through correctly and are allocated accurately. Any online or cloud-based system can glitch, and you can’t get complacent.
It also provides a second opportunity to identify problem transactions needing attention. Fraudulent charges need to be identified immediately, as well as any uncategorized transactions. Think of this process as a second line of defense for your clients, it protects both you and them.
We wrote a blog all about reconciliation, you can find it here.
We’ve addressed needing to categorize questionable expenses and income, but what about incorrect categorization over a long period of time? Some business owners and bookkeepers simply don’t have the experience or education to understand how each industry’s chart of accounts should be set up, and how things need to be categorized.
It’s essential to review the chart of accounts, review expense categorization and research any potential questions or concerns regularly. Don’t put this off. Issues tend to snowball, and the added stress to you trying to straighten things out during tax season isn’t worth it.
Lack of Education &/or Knowledge.
The answer to most bookkeeping dilemmas is simple. Educate yourself. There are many good, high & low-cost courses available for bookkeepers that can be a huge help to you and improve the service you provide to your clients. Quality bookkeeping service requires a broad knowledge base and a good understanding of accounting.
1. Get certified in QuickBooks. QuickBooks provides a fantastic certification course for free to QBO Accountant users. This gives bookkeepers the knowledge they need to utilize QBO in the most effective and efficient way possible.
2. Seek advice from peers or a mentor. This can be as easy as joining groups on Facebook where other established, knowledgeable bookkeepers reside and talk.
3. Subscribe to emails and blogs from notable accounting firms, or experienced CPAs and bookkeepers.
4. Utilize high quality, well sourced and vetted information on the internet. So many accounting websites and other accounting related articles are available to you, that can (more often than not) answer your questions.
5. Subscribe to the Halon Tax Elite Support Program. This provides you access to customized and specific advice from a CPA when you need it and is an amazing resource to your practice to correct or prevent errors. Sign up for the Elite Support Plan here.
The key here is to have the education and resources to help ensure accurate bookkeeping throughout the year.
Don’t let the year get away from you. Stay timely, stay accurate and stay in good communication with your clients. Create a daily and weekly checklist applicable to each client. Utilize QBO Work in QBO Accountant to create tasks and project lists and request information from your clients in a secure manner.
The more organized, the more streamlined, the more in control you are, the more accurate your bookkeeping will be and the less stress you and your clients will have next tax season.
Halon Tax is a QBOchat Viral Sponsor.