Cleaning up problems costs more than doing things right in the first place, especially in accounting, and January is prime time for certain errors. Before sending the books to your CPA for tax prep, your accounting department should review them for the following easily made errors…

Enter the correct year. Because Excel and QuickBooks default to the current year, and no one’s had much practice yet with ’07 dates, it’s easy to enter a 2006 transaction as 2007 and vice versa. The bottom line impact can be dramatic.

Both bookkeepers and the entrepreneurs they work for should look at every single line of the financial statements – P&L and balance sheet. This simple act is a fantastic quality control measure.

If your business files taxes on a cash basis, make sure QuickBooks does a correct conversion from accrual to cash basis. The most common problem is a positive or negative balance in A/R or A/P on the cash basis balance sheet. Also, make sure the retained earnings account is the same as when you did last year’s after-tax JEs. Retained earnings anchor the books; if they shift after the books are closed…it can be problematic and expensive to fix.

Finally, establish a level of materiality with your CPA. “Materiality” is accounting-speak for “large enough to worry about” when resolving issues. What’s material, $10 or $10,000? It depends on what type of transaction you’re talking about, the size of your company, and the degree of audit risk. No set of books is perfect, so knowing what’s “good enough” helps you close the books more quickly and move on.