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The auditing process conducted on a business institution looks into possible errors that may have been entered in the books. When accounting professionals find the mistakes, they immediately work to correct the data to avoid the wrong data from being used further into the recording. It may result in an unbalanced book or worse to make the financial statements unreliable. Mistakes that may be due to the wrong input of data or a typing error must be corrected immediately. But experts say that correcting the data is as important as understanding how it was committed.
There is no doubt that a seemingly simple accounting error impacts the overall financial status of the company. The cash flow, capital, profit and even the tax that your business ought to pay are affected by simple errors inputting the data in the system. A variety of things may cause the errors, but here is a list of the most common accounting errors committed by businesses.
· Imbalance in the Financial Statement
There are two types of balances that most companies have to keep a record of – the revenue account and the expense account. Both of which contains a list of when the money came into the company’s account and when it left. It practically shows business owners the cash flow. The revenue account must contain the cash inflow showing the actual credit balance of the company. On the other hand, the expense account must incur the debit balances. When the wrong data is put in the wrong balance sheet, the differences may result in an error altogether.
· Input of Data in the Wrong Year
Each year, the accountants tally the books in hope to achieve a balance in the ins and outs of cash to show whether the company earned or not. More than the simple recording of expenses, the books also ensure potential investors that they are putting their money on something useful. However, most businesses fail to keep their book closed for the fiscal year. When the books have been closed, remember not to go back to change any of the details. It is best to keep it that way. Unless it is a transaction that needs to be input in the records, it is best to have a professional accountant do it for you.
· Opting not to Include Particular Expenses or Details
Omitting data from the records may seem like nothing, but it can affect bookkeeping altogether. When you choose to delete data that should have been recorded, it can be the primary reason why your sheets are not balanced.
What’s the best way to keep you from committing these mistakes? Assign a professional accountant to take care of your business accounts. They are accurate, and they can make the process less consuming for you. Having the right audit firm will save you time and money in the long run, not to mention keeping your business from having an untrue financial statement.
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Hiring a professional accountant may be one of the best decisions you could ever do for your business. Not only does it mean professionalizing the books, but it means putting your finances on the right track. When it comes to business, it is essential to know the flow of money to ensure that your business is earning as much as you want it to. After all, managing your own business is not a walk in the park. It requires skills, time and focus. With an accountant working with you, your business is in good hands.
But finding the right accountant can be a challenge too. Don’t fret. These tips will help you find the right person or team for the job:
· Tip 1: Ask them if they are Available
With a shortlist of accountants on hand, it is relatively easy to pick one. The first thing to ask is whether they are available to do the work for you. When they say that they are, the next thing to ask is how often they are available to consult with you regarding your financial concerns for the business. Their available will allow you to open doors for communication – the basic foundation of a good relationship with an accountant. When you agree with their availability, then you are off to a good start.
· Tip 2: Talk About Their Rates
Assuming that they already know how much budget that you have to pay for their services won’t do you any good. The best way to hire an accountant is to be straightforward with them, especially when it comes to your budget. Some accountants might bill you for every service that they provide. Others will charge you for the period that they have worked for you. Choose to work with someone whose rates fit your budget.
· Tip 3: Ask your Friends About it
Asking for referrals is one of the most effective ways to hire professionals for your business. These referrals come from satisfied clients, which means that the person they are recommending for the job has provided them with satisfactory work. Don’t be afraid to ask personal and professional connections for referrals. After all, a good word put in for an accountant by a client means a lot. They might be so good.
Looking for an experienced, reputable and affordable accountant for your business may not be that easy. But with these tips in mind, you know you can never go wrong.
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This is one of the many questions that a starting business owner would ask. Although most of them knows the answer to it, some would leave the thought of thinking they could do their accounting without professional help. In the beginning, maybe they could. But as the company progresses and the business expands, it may become difficult to keep up with all the work that needs to be done.
But how do you know that it is time to hire an accounting firm? When should you seriously consider it? Here are some scenarios you might find yourself in. During these times, it is best to consider talking with a firm to get things done and get it done right.
· When you Need to Focus on the Business
Keeping the business books updated is easy to manage when you have nothing else to do. But when you need to take care of the delivery, the operations as well as the marketing of the business, taking care of the books can be stressful. Delegate the task to those who know it best. The accounting firm will be able to take care of all the responsibilities, giving you the opportunity to focus on the other things that need your expert attention.
· When you Want to Save on Costs
Hiring an accounting firm may seem like a considerable investment, but it might save you more in the long run. When you hire a person who will look into your business finances, their shortcomings might get in the way. With an accounting firm working to manage your business books, you are assured that they work as a team. With a team of experts working for your business, you are guaranteed that everything will be taken care of.
· When you Know Very Little, but you Want to Learn More
If accounting is not your expertise, then hiring an accounting firm will help you learn more about what your business needs to further its expansion. When you need to ask questions concerning the finances of your company, the members of the accounting firm will be there to answer them. Not only do you get instant answers, but you learn more from the experts in the long run. Isn’t that indeed beneficial?
Is it time to hire an accounting firm yet? Yes, yesterday was the best time. Only a team of professional accountants will be able to help you sort your concerns, keep the book updated and show you the many ways you can save for your business.
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Every business owner keeps his balance sheet. This is a business document that allows them to see the assets and liabilities of the company and help keep everything on the right track. It is essential for this balance sheet actually to find balance at any given time. The list of assets and liabilities should come to a tally to ensure that the business finances are on track. A simple unbalance in the balance sheet should be a cause for alarm. Even when the balance is tipped a little, it could still mean that the problem may be worse than expected.
It could affect the way you make decisions for the company. It could also cause problems in the profitability of the company. So how do you keep the balance sheet balanced? Here are some tips from the accounting experts in Edmonton.
Tip 1: Keep your Data in Place and Updated
More often than not, misplaced data often results in an unbalance in the books. Remember to keep your data in place and keep it updated. Never let months pass without you updating the books. Also, when you check on the balance sheet, remember to be specific about the balance that you want. If you're going to check if there is balance in the books for this month, then include all the particular expenses and profit only for this month. If you add the list of expenditures of last month, then it could result in an unbalance. To avoid misplaced data due to human error, it is best to have a certified accountant to keep the balance sheet and its data accurate. They can help conduct an audit to look for data manipulation and other discrepancies that may cause an unbalanced sheet.
Tip 2: Check for Incorrect Data Entry
Human error in accounting can be very high, especially when the staff is not trained right. Business transactions that are entered wrongly could mean a huge difference between business assets and liabilities. Such mistakes include the input of incorrect numbers or inputting only the credit or the debit side of the transaction. Ignoring the error and keeping it unreported could make the problem even worse. To fix the issues or prevent it from happening, it is best to have an accountant train your staff on how to do data entry. Let them cross-check your financial records too to ensure that all the data are in place.
Tip 3: Go for Equity Calculations Often
Whether it is a change in the inventory system or the increase in unpaid balances that is making it difficult to reach a balance, it is always best to have a professional accountant help you do it. Remember that the balance sheet won’t be balanced unless it shows you the difference between the company’s assets and liabilities. Therefore, minor errors on such could lead to significant damages.
The secret to keeping the sheet balanced is to have a professional help you with it. Their guidance can save you from losing all the vital data that could mean the difference between your business success or failure.