How do I know if my books are accurate?
Start with bank reconciliation. If your bank and credit card accounts in your accounting software match the actual statements to the penny, that’s the foundation. Every dollar that moved through your accounts is recorded somewhere. If they don’t reconcile, nothing else matters until you fix that.
Look at your balance sheet accounts. Accounts receivable should match what customers actually owe you. Pull an aging report and scan it. If you see invoices listed that you know were paid months ago, something is wrong. Same with accounts payable. It should reflect bills you actually owe, not ones that were paid weeks ago still sitting there.
Check credit card and loan balances. The liability accounts for your credit cards should match your actual statements. If your books show you owe $4,200 on your Amex but the statement says $3,800, something got recorded wrong or duplicated.
Compare your profit and loss to reality. If your books show you made $15,000 last month but you’re struggling to cover expenses, there’s a disconnect. The numbers should roughly match your sense of how the business performed. Gross margins that swing wildly from month to month usually indicate categorization problems or missing transactions.
Look for uncategorized transactions. Any line item labeled “Uncategorized Expense” or “Ask My Accountant” means someone didn’t know where to put a transaction and moved on. A few is normal. Dozens means the books weren’t finished properly.
Watch for stale balances. Balance sheet accounts that haven’t changed in months deserve investigation. That $500 sitting in a clearing account from eight months ago needs to be resolved. Old balances often indicate transactions that were never properly completed.
The truth is most business owners can spot obvious errors but miss subtle ones. Categories that are close but not quite right, transactions coded to the wrong project, depreciation that wasn’t recorded. A San Diego bookkeeper will catch issues that aren’t visible to someone without accounting training.
Monthly bookkeeping includes regular review and reconciliation so errors get caught while they’re fresh enough to fix. Even if you handle day-to-day bookkeeping yourself, having a professional review your work periodically gives you confidence that what you’re filing taxes on is actually correct. The goal isn’t perfection every day. It’s books that accurately reflect what happened in your business so you can make good decisions and file accurate returns.
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