Working with a Clifton Park, NY Accountant to Avoid Common Accounting Mistakes

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Good accounting allows for better organization. An accountant keeps everything organized including files, income statements, tax returns, invoices, and bank statements. Each year, a lot of people hire a Clifton Park, NY accountant to help with tax preparation and filing. An accountant can find more tax deductibles and determine the tax protocols for a business structure. Due to the many grounds to cover in accounting, mistakes can be made, especially if you handle accounting on your own. These mistakes include the following:

Failing to Follow Proper Accounting Procedure

Accounting and bookkeeping protocols must be followed. You need information such as the name of the provider, social security number, employer identification number, invoices, signed contracts, and bank statements. Such information must be treated with confidentiality and professionalism. Also, certain rules concerning clients, vendors, and others must be respected. 

Failing to Separate Your Business and Personal Accounts

Keeping your business and personal accounts separate can make it a lot easier to obtain an accurate overview of the cash flow of your business. If you use personal funds as part of the start-up costs, track such expenditures accurately for easier balance sheet management. In addition, separating business and personal accounts makes accounting more efficient. 

Lack of Organization

Accounting comes down to your ability to quickly sort through documents, which tend to look the same. As you run a business, you have several clients that hand you seemingly identical documents. The paperwork alone can easily overwhelm you if you are trying to handle your finances. Not organizing, sorting, tracking, and storing the documents can make it impossible to file them correctly. 

Poor Record-Keeping

Traditionally, record-keeping was all binders, folders, and documents. With the availability of computers and the internet, documents can be digital.  However, digital record-keeping is still complex and time-consuming. Plus, they are subject to new risks. While paper records could be damaged, stolen, or lost, digital records could be deleted, corrupted, or improperly labeled. When the IRS initiates an audit, it may demand returns from the previous years. When this happens, you need to produce all the necessary documents promptly. This makes proper record-keeping important. 

Not Reconciling Accounts

When you start processing data and updating financials, you may easily stay focused on your work. However, your process must include reviewing bank balances regularly. While you work, this balance can increase or decrease due to tiny factors. However, when the difference between the expected accounting amount and the actual amount in the bank account can widen. So, make sure to always check.