Accounting Prescription Series: Proactive Review of Your Accounting & Tax Systems
I’m sure at one point or another, you’ve wondered what a second opinion of your tax return and accounting system would yield. Maybe you had a big tax surprise on April 15 or random IRS notices, or maybe you’re being proactive. Bringing in another CPA for a review is a healthy business decision.
At Sykes & Company, P.A., we often hear from new contacts looking for a review of their accounting system and tax returns. Here are the top items we’re scrubbing for when we receive your information:
- Does the previous year tax return, particularly the balance sheet, tie into the accounting system? If the answer is no, then the accounting system is out of date and any reports pulled from that system are essentially meaningless. If this is your case, stop what you’re doing and update your accounting system. You cannot thrive with the old system in place; it provides no value.
- When was the last time the bank accounts in the system were reconciled? Hopefully it’s done on a monthly basis when the bank statements are released. If not, the bank balance on the books has never been reconciled with the bank statements so cash accounts on the books are not accurate.
- How current are the payables in the system? Sometimes we see several bills that were three, four, or five-plus years old sitting in the system as “bills” to be paid. There is very good chance that is not correct and therefore it is probable cost of goods, inventory, margins and net income are incorrect.
- Upon review sometimes we see the accounting system being used only as a check writer. All the pharmacy owner has done or does is write checks in the system and print them out. This is a red flag that there’s no accountability and integrity in the system.
- If points one through four are somewhat updated and reconciled, a view of the trends and margins give us a good sense of where the pharmacy is headed. We also like to compare this to the audit logs from the pharmacy. When used together, we can get a good idea if a pharmacy is dying or thriving.
We’re always happy to help pharmacy owners know what their situation is and we often do this free of charge regardless if they choose to engage our pharmacy accounting, advisory and tax services. Once we perform our initial review, we line up a video call to discuss in detail what it is we are seeing (or not seeing) and proactive steps you can take to take advantage of your opportunities. We also listen very closely to your needs and desires so we can get a better sense of what road map is best for you.
If you’d like us to review your accounting and give you honest feedback, call us today or set up a call using our online system.