You paid off a business loan, but it still appears on your balance sheet. Or a payroll liability shows the same amount month after month, even though payments have been made. Your profit and loss report may look reasonable, yet these other numbers leave you wondering whether the books are right.
You do not need to know the correcting entry before asking for help. Start by identifying the number you do not understand and the records that might explain it.
A balance sheet reports assets, liabilities and equity at a particular date. The SEC’s financial-statement guide explains that basic structure. For a business owner, the practical question is whether each balance can be explained and supported.
First confirm the date and the report settings
A current bank balance and a balance-sheet account from the end of last quarter are not figures from the same point in time. Before comparing them, confirm the report date, accounting basis and whether the relevant period has been reconciled.
Save the report you are questioning so you and your accountant can discuss the same version. Identify the account and the amount, then explain why it seems inconsistent. “The vehicle loan still shows a balance after the payoff” gives the review a clearer starting point than “the books look wrong.”
Changing between cash and accrual report settings can affect what appears, particularly for customer invoices and supplier bills. Do not change settings simply to make an uncomfortable balance disappear. Ask which basis is being used and whether it matches the purpose of the report.
Ask what supports a bank or credit-card balance
A reconciliation compares the bookkeeping account with the statement and identifies the items explaining the difference. Ask for the last completed reconciliation and whether anything remains unresolved.
An old outstanding check might still be valid, might have cleared under another entry or might need further investigation. A missing transfer could affect two accounts. Deleting a transaction without tracing the other side can create a different problem.
Provide the relevant statement and any payment confirmation or explanation you have. Avoid sending account passwords. Use the agreed secure method for financial records.
Look closely at loans that do not match expectations
If a loan balance seems high after months of payments, ask how each payment was allocated and whether new borrowing, interest or other charges explain the change. The bank withdrawal alone may not contain enough detail to reconcile the liability.
For a paid-off loan, provide the payoff statement and final payment record. Confirm whether the balance is for that specific loan and whether the final transaction has been recorded. Our guide to business loan payments and bookkeeping discusses the underlying record trail.
Ask your accountant to explain any proposed adjustment before treating the difference as an expense or removing the account.
Review payroll and sales-tax liabilities against the underlying records
A payroll or sales-tax account can contain amounts that were recorded but not yet paid, payments made after the report date, or entries that need correction. Compare the same periods and establish what each account represents before deciding whether it is wrong.
For payroll, useful records may include payroll reports, filing confirmations and payment records. For sales tax, the sales reports, filed returns and actual payments need to connect. Our sales-tax reconciliation guide covers that separate workflow.
Do not assume a liability is settled just because money left the bank, or assume it remains unpaid solely because a bookkeeping account has a balance. Confirm the records and who is responsible for any follow-up.
Ask about old opening balances and owner accounts
Balances can be carried forward from older records or from a prior software conversion. An opening-balance or clearing account may deserve attention if nobody can explain what it contains. Its name alone does not determine the correct adjustment.
Owner contributions, loans, reimbursements and distributions also need clear documentation. The appropriate classification depends on the facts and the business structure. Explain what happened, provide supporting records and ask your accountant how the transaction should be reflected.
The IRS’s Publication 583 discusses keeping supporting records. A report is more useful when its balances can be traced to those records rather than accepted solely because the software produced it.
Agree on the correction and keep an explanation
Ask which period a proposed correction affects, what evidence supports it and whether prior reports or tax filings need separate review. Not every bookkeeping correction requires an amended tax return, and a change affecting a filed period should not be dismissed without considering that question.
Keep the explanation with the updated report. If the change affects an earlier report already shared with a lender or another professional, discuss whether an updated version should be provided. Clear version control prevents several conflicting reports from circulating as the final numbers.
Go Tax Dude helps small business owners in Port Washington and remotely organize their records, reconcile accounts and understand financial reports through accounting and bookkeeping support. We also provide business tax preparation, helping keep the books and tax work connected.