Ryan Vaughn flags red flags in bookkeeping before tax filing. Negative numbers in income or expenses usually mean errors, except in service and discount accounts where they reflect refunds. A negative cash balance signals a reconciliation problem that needs fixing.
Tips to clean up your books for tax filing purposes. The next thing is, in general, having a negative number in an account is bad. So if I look at a profit and loss statement and my income number shows a negative number, that's bad. If I have an expense category, maybe, well, I don't know, call it office supplies, and that number is negative, That's bad. An obvious account that should be negative is your service and discount category. On my balance sheet, same deal. Do my books show negative cash balances in my bank accounts? Most banks don't let you go negative, so if my books show it's negative, I got some problems I gotta clean up. If I reconciled my accounts, it's less likely that I will have any negative numbers.
