It’s undeniable that accounting is a challenging topic, especially for newbies. Getting a grip on it, understanding it, and implementing it properly are complex tasks that often come with frustration and stress. But who can blame you if you feel overwhelmed by all the fine details?
But don’t worry; here are business owners’ five most accounting problems. Discover them here.
Bank Reconciliation
You’re not alone if you have an accounting system and need help tracking your bank reconciliations. If you’re like most businesses, you’ll find that bank reconciliations are one of the most challenging tasks in your accounting process.
Here’s how to make your bank reconciliation process easier:
- Make sure you keep a log of all the transactions that go into your bank accounts. It will help ensure that everything runs smoothly with the information that goes into each performance. You can also create a spreadsheet listing all the transactions as they happen, so they stay visible in translation.
- Make sure that all of your payments are accounted for monthly. It is imperative regarding payroll and other recurring tax deductions or expenses from vendors or clients (such as utilities). By keeping track of these regular monthly bills, you can easily see which ones have been paid and which still need to be paid. It will also help prevent unauthorized payments from happening when everyone needs to remember something.
Tax Accounting
Taxes are always a big issue for individuals and accountants, primarily if they work for start-ups or small businesses.
An accountant needs to deal with many different types of taxes, including income tax, sales tax, property tax, payroll taxes, excise taxes, and even customs duties. In addition, these expert tax accountants can help you save money by making sure you approach the tax season with the best strategy. Aside from all these different types of taxes, special laws apply only in certain areas, such as countries or states, making them more complicated.
Unpaid Vendor Bills
There are two types of vendors in the accounting world: those who can be paid and those who cannot. The former is “payable,” while the latter is “non-payable.” The main difference between these two types of vendors is that payables can be paid.
To see if you have any unpaid vendor bills, you can review your invoices and find the ones your client still needs to pay. If you have unpaid vendor bills, this is a sign that your accounting software may need to be set up correctly.
To fix this problem, you need to ensure that all of your accounts are correctly set up in your accounting software so that they can be paid out correctly. You should also ensure that every invoice has a status of “Paid” or “Not Paid,” as well as an amount due on each invoice.
Unbilled Items
If you have been doing business with a customer, they may still need to pay for some of the items they ordered. They may have even insisted that they didn’t need to pay for those items at the time.
If you don’t offer a discount or a payment plan on unbilled merchandise, it can be hard to recover the money from your customer. They may have already thrown away their receipt and other paperwork, so it can be challenging to figure out what was owed and how much was owed.
You might also have customers who need to remember things like taxes or shipping costs and then try to blame you for not paying them enough attention when they signed up with your company.
You need to ensure that all of your customers understand what is expected from them when it comes time for payments or refunds so that no one will try to avoid charges or find an excuse not to pay up later on down the line.
Summarized Financial Reports
There are many financial reports, but the most common are summarized balance sheets and income statements. Summarized financial reports are short versions of the original documents that include essential information.
Here are some examples of summarized financial reports:
- A summary of revenue is a report about how much revenue was generated for a given period, such as one year or six months. This report will list all payments broken down by each type of revenue and then total it up at the end.
- A profit and loss statement (also known as P&L) is a summary report showing how much money was made during a specific period and what expenses were incurred. The P&L can be broken down into different sections to show how much profit or loss was made in each department or operation (for example, sales, marketing, and administration).
Final Thoughts
Accounting can get a bad rap for being complicated and confusing, but it doesn’t have to be that way. Don’t let the idea of it scare you off; instead, embrace accounting’s benefits and make it work for you.
Of course, you only need an expert accountant who can provide better service for your company’s accounting and make everything run smoothly.
