Accounting

Common Bookkeeping Mistakes to Avoid: A Guide for Accounting Professionals

Published

4 months ago

September 28, 2024

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 Delays in data entry can also cause cash flow problems and hinder decision-making based on outdated financial information.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

Accounting

In the blogs: To be continued?

Published

6 hours ago

January 22, 2025

Business Finance News

TikTok and taxes; future of L.A. revenues; engagement limits; and other highlights from our favorite tax bloggers.

Accounting

Carr, Riggs & Ingram merges in CapinCrouse

Published

12 hours ago

January 21, 2025

Business Finance News

Carr, Riggs & Ingram, a Top 25 Firm based in Enterprise, Alabama, has added CapinCrouse, a Regional Leader based in Indianapolis, effective Jan. 17, 2025.

The deal is CRI’s biggest merger in its history, and the first since it received outside investment last November from Centerbridge Partners and Bessemer Venture Partners.

CapinCrouse focuses on exclusively serving nonprofits, such as faith-based organizations and private colleges. The merger will add 40 partners, 185 professionals and 15 offices to CRI, which has 437 partners and 2,304 staff

After the outside investment, CRI split its attest and non-attest practices, as is common when accounting firms receive private equity or venture capital funding. Carr, Riggs & Ingram, L.L.C., as an independent licensed CPA firm, is providing assurance, attest and audit services. CRI Advisors, LLC (including its subsidiary entities) operates as a separate legal entity, providing clients with tax and business consulting services.

“This merger represents an exciting milestone in our firm’s history and a significant advancement for both CRI and CapinCrouse,” said CRI Advisors LLC chairman Bill Carr in a statement Tuesday. “We have previously invested in firms that specialize in serving faith-based organizations and private colleges. With the addition of CapinCrouse, CRI is now positioned to become the leading national provider in these vital markets. By combining our strengths, we will enhance the value we offer and greatly expand our national geographical presence. We are proud to welcome CapinCrouse to the CRI family.”

Financial terms of the deal were not disclosed. CRI ranked No. 24 on Accounting Today‘s 2024 list of the Top 100 Firms, with $455.36 million in annual revenue. CapinCrouse ranked No. 27 on Accounting Today‘s Regional Leaders list of the Top Firms in the Great Lakes region, with $35.51 million in annual revenue.

“We are very pleased to join CRI,” said Fran Brown, Managing Partner of CapinCrouse. “For over 50 years, our focus has been on providing innovative service to nonprofit organizations whose outcomes are measured in lives changed. CRI’s commitment to client service, respect, and integrity is an excellent fit with our mission and firm culture. We will continue to operate under the CapinCrouse brand and are excited to now have access to more offerings and resources to further drive exceptional client service.”

Koltin Consulting Group CEO Allan Koltin advised both firms on the merger. “It is interesting to note that this is CRI’s biggest M&A deal in its history, and it comes on the heels of their private equity deal with Centerbridge Partners and Bessemer Venture Partners,” he said in a statement. “CapinCrouse, a top 125 firm nationally, is viewed by many as the preeminent firm in the country when it comes to the audit and related advisory services of nonprofits and religious organizations. My intuition suggests that going forward, we will see CRI expanding its geographic reach nationally by combining with more top 200 firms.”

Last August, CRI added ProSport CPA, a firm in New Kent County, Virginia, offering tax and accounting services within the sports and entertainment niche. In 2023, CRI expanded into Oklahoma by adding Stanfield + O’Dell PC, a firm in Tulsa. CRI expanded to South Carolina in 2022 by adding Lanning Group LLC, a firm based in Mount Pleasant in the Charleston suburbs, and expanded in Florida by adding Alonso & Garcia, a firm in Miami. It expanded that year in Florida by adding Travani & Richter in Jupiter, and in Texas by adding Pharr Bounds LLP in Austin.

In 2022, CapinCrouse acquired the Global Center for Nonprofit Excellence.

Accounting

Trump names Mark Uyeda acting chair of SEC

Published

13 hours ago

January 21, 2025

Business Finance News

SEC commissioner Mark Uyeda, speaking at the AICPA & CIMA Conference on Current SEC and PCAOB Developments

President Donald Trump named Mark Uyeda, a Republican member of the Securities and Exchange Commission, as acting chairman of the SEC, while confirmation hearings await for Trump’s official pick as chairman, Paul Atkins.

Uyeda has been an SEC commissioner since 2022 and a member of the staff since 2006. Last month, he discussed at an AICPA & CIMA conference in Washington how the SEC is likely to pursue a more deregulatory approach during the Trump administration. The previous SEC chair, Gary Gensler, has pursued an active approach to enforcement and rulemaking, provoking opposition and a wave of lawsuits from the financial industry. A few weeks after the election, Gensler announced plans to step down on Jan. 20, Inauguration Day.

“I am honored to serve in this capacity after serving as a Commissioner since 2022, and a member of the staff since 2006,” Uyeda said in a statement Monday. “I have great respect for the knowledge, expertise and experience of the agency and its people. The SEC has a vital mission—protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation—that plays a key role in promoting innovation, jobs creation, and the American Dream.”

Last month, Trump named Paul Atkins, a former SEC commissioner, as a replacement for Gensler. Atkins has been a proponent of cryptocurrency, while Gensler had imposed steep penalties on companies in the crypto industry. Confirmation hearings have not yet begun for Atkinds, but he has been meeting with lawmakers privately and is expected to be confirmed.

As acting chairman, Uyeda announced Monday that he would be launching a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. The task force will be led by another Republican commissioner, Hester Peirce.

The task force plans to collaborate with SEC staff and the public to set the SEC on a regulatory path as opposed to pursuing enforcement actions to regulate crypto “retroactively and reactively,” according to a news release.

“This undertaking will take time, patience and much hard work,” Peirce said in a statement. “It will succeed only if the Task Force has input from a wide range of investors, industry participants, academics and other interested parties. We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation.”

The task force plans to hold roundtables in the future, but in the meantime is asking for public input at [email protected].