Avoiding Accounting and Tax Errors

	Have you ever made a math error with your checkbook or banking accounts?

Basic math errors and incorrect tax computations are two of the five most common business

tax errors.

per the IRS

What can business owners do to minimize mathematic and tax errors?

When I was an accounting assistant at Comey & Shepherd, the accounting team had an

error bank. We each contributed a dollar when we made an error.

1

Set time to exclusively manage your business and related tasks.

2

Perform monthly reconciliations of all financial records and bank accounts.

3

Keep all business records, whether fiscal or operational organized and maintained.

4

Match all outside records such as invoices to business financial data on hand frequently.

5

Just as a carpenter will measure twice and cut once, you should double check all numbers.

Computers and calculators will make this task easier.

6

Test your calculations logically. For example be able to subtract figures that you added in

order to achieve the same starting point. Specifically if 1+2=3 then 3-2=1.

7

Restrict the tasks of your employees in order to avoid intentional misreporting.

8

Hire accounting professionals to review and monitor this information and update the records

if deemed necessary.

a

Monthly accounting services, including the bookkeeping task should help avoid errors.

This will help better explain cash flows and budget trends.

b

I have worked with records from shoeboxes of receipts, checkbooks, bank statements

and turned them into tax returns and or financial statements.

9

For tax filings match up with other government filings in order to avoid audits and confusion.

a

reconcile totals that are entered with your tax return figures. For example make sure the

reported payroll records can be reconciled with the reported payroll expense on your

tax returns.

b

reconcile all 1099 statements with both the reported revenue and expenses.

c

confirm that all reported tax payments have been paid and cleared your bank.

d

Verify that you don't count penalties as payments of tax due.