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What happens if my balance sheet doesn't balance?

A balance sheet that doesn’t balance means something is wrong with your accounting records. The fundamental equation of accounting is assets equals liabilities plus equity. When those two sides don’t match, there’s an error somewhere that needs to be tracked down.

This isn’t a business problem in itself. It’s a bookkeeping problem. Your company isn’t failing because the balance sheet is off. But you can’t trust your financial statements until the error is found and corrected. That matters when you need accurate numbers for tax returns, loan applications, or making business decisions.

The most common causes include bank accounts that weren’t reconciled properly, transactions entered with only one side of the journal entry, opening balances that were set up incorrectly when the books were started, and rounding errors that accumulated over time. Sometimes the issue traces back to a QuickBooks or accounting software glitch where a transaction got partially deleted or corrupted.

Finding the error usually involves working backward through reconciliations and comparing periods. If the balance sheet balanced last month but not this month, the error happened in the current period. If it’s been off for a while, the issue may be buried deeper. Experienced bookkeepers often start by looking at retained earnings and equity accounts since that’s where many errors surface.

Don’t ignore it or try to force a balance by creating a “miscellaneous adjustment” entry. That approach hides the real problem and makes future periods harder to reconcile. The goal is to find the actual error and fix it properly so your books are accurate.

If your internal team can’t locate the source of the discrepancy, this is exactly the kind of problem a Boca Raton fractional CFO or controller can help resolve. A financial records cleanup engagement typically starts by identifying these types of errors, correcting them, and establishing processes to prevent them from recurring. The fix is usually straightforward once you find it, but finding it requires knowing where to look.

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More Questions

How can a CFO help reduce my business expenses?

A CFO reduces expenses by analyzing your full financial picture, not just cutting obvious costs. They identify waste through proper reporting, renegotiate vendor contracts, optimize cash flow to reduce financing costs, and implement process improvements that create lasting savings.

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Can messy books cause problems with the IRS?

Yes. Disorganized financial records increase audit risk and make audits significantly worse if they happen. When you can't substantiate income and expenses, the IRS can estimate what you owe and disallow deductions entirely.

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How do I correct miscategorized transactions?

The correction method depends on when you catch the error. Same-period mistakes are simple reclassifications. Closed-period errors require adjusting entries that don't distort your current financials.

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How much does a fractional CFO cost in South Florida?

Fractional CFO services in South Florida typically range from $3,000 to $10,000 per month on retainer, or $200 to $500 per hour for project-based work. The actual cost depends on scope, complexity, and how much time your business requires.

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Do I need a controller if I use QuickBooks?

QuickBooks records transactions. A controller ensures those transactions are recorded correctly and that your financial statements actually reflect reality. The software is a tool. The controller provides judgment and oversight.

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How does a controller ensure accurate financial statements?

A controller ensures accuracy through systematic review of all account balances, proper adjusting entries, reconciliation verification, and documented month-end close procedures. They serve as the quality control layer between day-to-day bookkeeping and final financial statements.

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Premium controller and CFO advisory services for South Florida businesses, located in Boca Raton. Jargo delivers executive-level financial leadership to companies that have outgrown basic bookkeeping. Owned and operated by a CPA with over 15 years of C-suite experience.

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