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Common Bookkeeping Mistakes to Avoid: A Guide for Accounting Professionals

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Bookkeeping Mistakes to Avoid

Bookkeeping is the backbone of any organization’s financial health, but even seasoned accounting professionals can sometimes make errors that may significantly impact financial records and reporting. Awareness of these common pitfalls is crucial for maintaining accurate and reliable financial information. Here are some of the most frequent bookkeeping mistakes and tips on how to avoid them.

Mixing Business and Personal Finances

One of the most common mistakes is comingling business and personal finances. When business owners or accountants use the same bank account for both personal and business expenses, it becomes difficult to track business profitability accurately. Moreover, it complicates tax calculations and can lead to compliance issues. To avoid this, it’s essential to maintain separate bank accounts and credit cards for business transactions. Implementing strict procedures for expense tracking ensures that personal and business expenditures are never mixed, making financial analysis and tax preparation much more straightforward.

Delaying Transaction Recording

Procrastination in recording transactions can lead to various issues, including missing entries, duplicate transactions, and tedious reconciliation tasks. Delays in data entry can also cause cash flow problems and hinder decision-making based on outdated financial information. Bookkeepers should establish a routine for entering transactions as they occur. Utilizing accounting software with automated transaction imports from bank accounts can significantly reduce the risk of delays and errors, ensuring up-to-date financial records.

Neglecting Account Reconciliation

Failing to regularly reconcile accounts against bank statements, receipts, and invoices is like navigating a ship without a compass. Account reconciliation is a critical practice that ensures every transaction is accounted for and helps identify discrepancies early. Without this step, unnoticed errors can grow into more significant issues, potentially leading to incorrect financial statements. Implementing a monthly reconciliation process for all accounts, including bank accounts, credit cards, and petty cash, can help maintain accuracy and prevent costly mistakes.

Incorrect Expense Classification

Misclassifying expenses is another common error that can distort financial statements and lead to inaccurate tax filings. For instance, categorizing a capital expenditure as an operational expense can misrepresent profitability and lead to non-compliance with accounting standards. It’s essential to stay informed about the latest classification guidelines and to review transactions carefully before recording them. Using accounting software with built-in expense categorization can also help reduce the likelihood of misclassifications.

Overreliance on Software and Lack of Professional Guidance

While bookkeeping software can automate many tasks, it cannot replace the expertise of a skilled accountant. Relying solely on software without consulting an accounting professional can result in overlooked nuances and best practices that are critical for an organization’s financial health. Engaging a professional accountant for regular reviews or audits ensures that the bookkeeping system is functioning optimally and that the organization is compliant with all regulations.

Inconsistent Record-Keeping

Consistency in record-keeping is vital for accurate financial reporting. Inconsistent application of accounting policies or procedures can lead to confusion and errors in financial statements. Bookkeepers should adhere to a standardized process for recording transactions and ensure that all team members are trained in these practices. Regularly updating internal controls and procedures can also help maintain consistency.

Ignoring Tax Deadlines and Obligations

Missing tax deadlines or failing to comply with tax regulations can result in penalties and interest charges, impacting the organization’s financial health. Bookkeepers should keep track of all relevant tax deadlines and ensure that the business meets its tax obligations promptly. Setting reminders and utilizing tax management software can help avoid these costly mistakes.

Maintaining vigilance against these common #bookkeeping errors is essential for the accuracy and integrity of financial records. By implementing strict procedures, utilizing accounting software effectively, and engaging professional guidance when necessary, accounting professionals can ensure that their organizations’ financial information is reliable and compliant. Diligence and awareness are key to mastering the art of bookkeeping and safeguarding an organization’s financial well-being.

Norene

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House passes tax administration bills

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The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all endorsed this week by the American Institute of CPAs, and passed two others as well.

  • H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
  • H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
  • H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
  • H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.

“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”

The bills were also included in a recent Senate discussion draft aimed at improving tax administration at the IRS that are strongly supported by the AICPA.

The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter. 

  • H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
  • H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS. 

House  Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.

“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”

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Accounting

In the blogs: Many hats

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Teaching fraud; easement settlement offers; new blog on the block; and other highlights from our favorite tax bloggers.

Many hats

  • Taxbuzz (https://www.taxbuzz.com/blog): There’s sure an “I” in this “teamwork:” What to know about potential IRS and ICE collaboration.
  • Tax Vox (https://www.taxpolicycenter.org/taxvox): How IRS data would likely be unhelpful validating SNAP eligibility.
  • Yeo & Yeo (https://www.yeoandyeo.com/resources): How financial benchmarking (including involving taxes) can help business clients see trends, pinpoint areas for improvement and forecast future performance.
  • Integritas3 (https://www.integritas3.com/blog): One way to take a bite out of crime, according to this instructor blogger: Teach grad students how to detect, investigate and prevent financial fraud.
  • HBK (https://hbkcpa.com/insights/): Verifying income, fairly distributing property, digging the soon-to-be-ex’s assets out of the back of the dark, dark closet: How forensic accounting has emerged as a crucial element in divorces.

Standing out

Genuine intelligence

  • AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): How artificial intelligence and other tech is “Reshaping Finance,” according to this podcast. Didem Un Ates, CEO of a U.K.-based company offering AI advisory services, tackles the topic.
  • Taxjar (https:/www.taxjar.com/resources/blog): How AI and automation can help even the knottiest sales tax obligations and problems.
  • Dean Dorton (https://deandorton.com/insights/): Favorite opening of the week: “The madness doesn’t just happen on college basketball courts — it also happens when your finance team is stuck using a legacy on-premises accounting system.”
  • Canopy (https://www.getcanopy.com/blog): Top client portals for accounting firms in 2025.
  • Mauled Again (https://mauledagain.blogspot.com/): Despite what Facebook claims, dependents have to be human.

New to us

  • Berkowitz Pollack Brant (https://www.bpbcpa.com/articles-press-releases/): This Florida firm offers a variety of services to many industries and has a good, wide-ranging blog. Recent topics include the BE-10, nexus and state and local tax obligations, IRS cuts and what to know about the possible bonus depreciation phase out. Welcome!

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Accounting

Is gen AI really a SOX gamechanger?

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By streamlining tasks such as risk assessment, control testing, and reporting, gen AI has the potential to increase efficiency across the entire SOX lifecycle.

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