The general ledger (GL) is the central hub of a company’s financial records. It contains all financial transactions, including income, expenses, assets, liabilities, and equity accounts. Without proper maintenance, a business’s financial statements can become inaccurate, leading to misreported income, tax errors, and poor financial decision-making.
Many businesses struggle with unreconciled transactions, incorrect account classifications, and data entry mistakes that can cause discrepancies in financial reports. Keeping the general ledger clean and updated is essential for ensuring financial accuracy, compliance, and efficiency.
Jessica Croft of Bookkeeping by Prismatic Jess specializes in general ledger maintenance, ensuring that businesses maintain accurate, well-organized financial records that reflect their true financial position.
This guide will cover the importance of general ledger maintenance, common bookkeeping errors, and how Jessica helps businesses maintain clean and accurate financial data.
The general ledger is a business’s primary record-keeping system for tracking financial transactions. It is made up of several accounts, including:
General ledger maintenance involves ensuring that all transactions are recorded accurately, categorized correctly, and reconciled with bank and credit card statements.
1. Ensures Accurate Financial Reports
A well-maintained general ledger allows businesses to generate reliable profit and loss statements, balance sheets, and cash flow reports.
2. Prevents Accounting Errors and Misstatements
Without regular maintenance, businesses risk:
Duplicated transactions that overstate expenses or income.
Misclassified transactions that affect tax deductions.
Unrecorded expenses that lead to financial mismanagement.
3. Helps with Tax Compliance and Reduces IRS Audit Risk
Businesses with an accurate general ledger can:
Report correct taxable income and deductible expenses.
Provide clean financial records in case of an IRS audit.
Reduce tax penalties caused by misreported financial data.
4. Strengthens Internal Financial Controls
Maintaining the general ledger ensures that all transactions are properly documented, helping to:
Detect fraud or unauthorized transactions.
Ensure compliance with tax laws and accounting standards.
Improve accountability in financial management.
5. Improves Business Decision-Making
Business owners need accurate financial records to:
Evaluate profitability and expenses.
Plan for future investments.
Ensure sufficient cash flow for operations.
1. Incorrect Transaction Categorization
Some businesses misclassify operating expenses as capital expenses, leading to inaccurate tax filings.
Revenue may be recorded in the wrong account, affecting financial reports.
2. Failure to Reconcile Accounts
If bank, credit card, and loan accounts are not reconciled, transactions may be missing or duplicated.
Failing to reconcile accounts leads to misstated cash balances.
3. Not Recording Adjustments and Accruals
Some businesses fail to record depreciation, prepaid expenses, or accrued liabilities, leading to incorrect financial reports.
4. Duplicate or Missing Entries
Duplicate transactions overstate expenses or income.
Unrecorded transactions create gaps in financial records.
5. Not Reviewing the General Ledger Regularly
Without ongoing maintenance, errors accumulate over time, making financial clean-up time-consuming and costly.
Jessica helps businesses identify and correct these issues before they create financial challenges.
1. Reviewing and Cleaning Up Transactions
Jessica carefully reviews the general ledger to:
Identify misclassified transactions.
Remove duplicate entries.
Ensure that all income and expenses are correctly recorded.
2. Reconciling Bank, Credit Card, and Loan Accounts
Jessica ensures that account balances match financial statements, correcting any missing or unmatched transactions.
3. Verifying Expense and Revenue Categories
Jessica reviews income and expense accounts to:
Ensure all transactions are classified properly.
Adjust miscategorized entries to reflect true business activity.
4. Recording Journal Entries for Adjustments
She makes necessary adjustments, such as:
Recording depreciation and amortization.
Adjusting prepaid expenses and accruals.
Ensuring tax liabilities are recorded accurately.
5. Identifying and Correcting Discrepancies
Jessica investigates any discrepancies between financial reports and actual transactions to ensure that financial records are accurate.
6. Providing Monthly General Ledger Reports
At the end of the review, Jessica provides:
A summary of adjustments made.
A clean, reconciled general ledger.
Recommendations for maintaining financial accuracy going forward.
1. Ensures Businesses Have Accurate Financial Records
Jessica ensures that financial records are clean, well-organized, and properly classified.
2. Saves Time and Reduces Stress for Business Owners
By handling general ledger maintenance, Jessica allows business owners to focus on growing their business instead of fixing accounting mistakes.
3. Prevents Costly Errors and Tax Issues
With an up-to-date general ledger, businesses avoid:
Overstating or understating revenue.
Filing incorrect tax returns.
Facing IRS audits or penalties.
4. Improves Financial Planning and Decision-Making
With accurate records, businesses can:
Track profitability more effectively.
Budget more efficiently.
Make strategic financial decisions based on real data.
1. Expertise in Financial Accuracy and Compliance
Jessica specializes in QuickBooks Online and general ledger maintenance, ensuring that all financial transactions are properly recorded.
2. Works with QuickBooks Online
Jessica works exclusively with QuickBooks Online and is a certified QBO ProAdvisor, which requires annual recertification. This means that she is skilled and familiar with the software.
3. Detail-Oriented and Reliable
Jessica meticulously reviews every transaction, identifies errors, and ensures financial records are error-free.
4. Ongoing Support for Financial Organization
Beyond general ledger maintenance, Jessica offers monthly bookkeeping services to keep businesses financially organized year-round.
Ensuring that the general ledger is well-maintained and accurate is essential for financial transparency, tax compliance, and business growth.
