Are My Finances a Nightmare?

Walker Glantz: Are My Finances a Nightmare

In this bone-chilling blog, we explore real-life stories of accounting professionals and their unforgettable experiences with clients who had scary books. These are not your typical transactions; they are twisted tales right out of a horror story.  Are you guilty of any of these frightful flubs?

Frightful Financials

The balance sheet is where the bones are buried. Scary bookkeeping never goes away … it will keep you up at night and haunt your dreams.

Unreconciled Accounts: Uncleared checks and double posted transactions creep in the details. The likelihood of these eerie entries is magnified when bank and credit card accounts are left unreconciled for months. They are also a hiding place for undetected fraud.

Undeposited Funds:  A confusing account for untrained accountants and bookkeepers. It’s a crypt for cash until it hits the bank. Trouble lurks when Undeposited Funds are not managed properly including misstatement of revenue and possibly theft.

Inventory:  Running out of inventory is a nightmare! Proper reconciliation of inventory between the general ledger and point of sale system is crucial when planning for purchases and managing cash.

Sales Tax Liabilities: Unwinding these accounts when they are set up wrong is dreadful and scary consequences await if filings are skipped.

Debt:  Misposted debt payments create the illusion of lower liabilities. Grim cash balances can result when future payments are a surprise.

Opening Balance Equity: This is a control account specific to QuickBooks and should always equal zero. Those unfamiliar with the software are at risk for financial statement inaccuracies if this account remains unattended.

Dreadful Deductions

You know what’s scarier than a monster hiding under your bed? An IRS audit. Be careful with what you call business expenses and make sure to keep support:

Not-so-deductible Deductions:  Designer outfits for work, costs for a pet that comes to the office, Halloween costumes, personal events claimed as business networking, and trips to Legoland: Not business expenses.

Vehicle Expenses:  Unless it’s the Ghostbuster Ectomobile, incorrectly claiming your vehicle as a business deduction can result in fines and penalties. The rules related to mileage and travel are mystical to the mere mortal. A wise CPA can help you decipher the codes.

Expenses from a Hobby:  Navigating the eerie border between a spooky pastime and a legitimate business can be perplexing but it’s a matter of utmost importance, especially when dealing with the tax goblins. Jump into more detail on this topic here.

Meals:  Treating yourself to meals on the company card turns tricky if they are excessive or extravagant. Make sure to document the business purpose of the meal along with the attendees to prevent unsavory surprises in the event of an audit. Learn more about these types of expenses here.

Petrifying Payrolls

There are no accounting emergencies … unless it has to do with payroll. A simple mistake can unleash financial fright and bring out the monster in your team. Beware of these payroll blunders:

Missing Timesheets:  Don’t ghost your payroll team! Late or missing timesheets may result in processing delays and employees receiving their paychecks late. Rushing to process late timesheets leads to ghastly mistakes in payroll calculations. Cue the screams!

Staff Changes:  No bones about it, payroll corrections are a nightmare! New hires, terminations, wage updates, or benefit changes all affect payroll and should be communicated to your accountant in advance when possible. Every state has their own unique labor laws and there are frightful consequences for non-compliance.

Cash, Physical Checks, Gift Cards:  Manual payrolls (those run outside of the payroll system) should be given to your accountant as soon as they’re made. All cash payments – including gift cards greater than $25 – are considered taxable wages by the IRS. Failure to report compensation results in wickedly wrong W2 numbers as well as underpayment of taxes.

Unmask the Bookkeeping Monsters Lurking in the Shadows

Having a great CPA or bookkeeper is like having a trusty ghost detector in a haunted house. They’ll help you avoid financial missteps that could otherwise come back to haunt you. With their expertise, your financial path will be well-lit and you can rest assured that you won’t be tricked by any financial surprises lurking in the shadows.

When partnering with Walker Glantz, you have your very own squad of CPAs, accountants, and payroll specialists looking out for your books. We are a CPA firm dedicated to helping entrepreneurs achieve financial success and are here to help you avoid frightening financial faux pas. Contact us today to get started.