Unfortunately, when you manage your accounts instead of hiring a professional to do it for you, mistakes are easily made. While some can be very small, others can be disastrous to your business. We’ll explore five of the most common accounting mistakes you’ll want to avoid when managing your books. Read on to learn more.
1. Data Entry Errors
Perhaps the most common accounting mistake is the data entry error. This type of mistake occurs when you enter your data incorrectly into your accounting system, either in the wrong location or incorrect information entered. Examples of typical data entry errors include the following:
2. Omitting an Entry
Keeping track of all your invoices and receipts can be difficult on top of managing your accounting. Hiring accounting consulting services can relieve the stress involved in the process and prevent this next error.
Another common mistake is the omission of an entry. All this means is that you forgot to record something in the accounting software under the correct account. Whether it’s a bill you paid or owe, something you bought for the company, or a payment you received from a customer, it’s now lost with no record of its existence.
3. Placing an Entry in the Wrong Account
Often called an error of commission, placing an entry into the wrong account will make your accounts balance out, but the right account will be missing money. Generally, with this type of accounting mistake, the entry is placed into the correct general account, but the error is made with the sub-account.
For example, one customer makes a payment. When you log in, you accidentally log in against another customer’s account. Your accounts still balance, but both customers’ accounts are now incorrect.
4. Duplicating Entries
When your company is managing your accounts, and more than one person has access to the accounting system, there’s room for duplication errors. This occurs when the same entry is added to the system more than once. It can cause an incorrect overstated income or expense, depending on the type of entry it is.
5. Entering Personal Expenses as Business Expenses
It can be confusing to manage multiple accounts. If you have a personal expense account and a business expense account, you should never get confused. However, this is another common accounting mistake. If it’s not caught quickly and corrected, it can have severe consequences for all involved.
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When you need reliable bookkeeping and real estate accounting services, turn to Vivid Accounting. We’ll take the stress off your plate and ensure your accounts always stay accurate. Visit our website today for more information.