You Have Transactions Not Categorized
If your books contain uncategorized transactions, your financial reports will not be accurate. Often, you will find these transactions labeled as Uncategorized Income and Uncategorized Expenses in QuickBooks. Any transactions that are not classified must be done before your taxes are filed to ensure accuracy.
Your Accounts Aren't Reconciled
It is crucial to make sure accounts are reconciled before filing your taxes. This helps identify errors and fraudulent activity while validating the money spent and earned agrees with corresponding bank statements.
You Have Negative Asset or Liability Accounts
When a negative liability appears on the balance sheet, it indicates that a company paid out more than the amount required for the liability. For instance, if you accidentally paid a supplier's bill twice, the first payment would reduce the original liability to zero, as the second payment would have no liability to offset, resulting in a negative liability on the balance sheet. Most of the time, negative liabilities are created by errors.
A negative asset balance would also appear on the balance sheet and is a sign that an incorrect transaction may have been recorded into an account. This typically occurs when debits and credits are accidentally reversed, or a wrong account was utilized in a journal entry. It is vital to iron out these mistakes before tax season.
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