Bookkeeping. One simple word makes business owners across the globe shudder; are you one of them? We know that bookkeeping can be dreary, confusing, difficult, and most of all time consuming. Luckily for you, it doesn’t have to be! Correcting a few small mistakes can transform your feelings about bookkeeping from dread to relief. We’ve compiled a short list of the top six bookkeeping mistakes that small businesses make. Enjoy!
Mixing Business and Personal Spending
It may seem pointless to save small reimbursable receipts under $75 since they aren’t required by the IRS, but having them comes in handy in case you do get audited. It solidifies where your money is going and when. Try keeping a digital record of small receipts and reimbursements instead of throwing them away or putting them in a pile. After all, those small receipts add up.
Not Reading Your Financial Statements Regularly
Financial statements are a look into how your business is doing. They help you make sure you are staying in control of your cash flow and business. It is also important that you are getting financial statements often and that books are current. If you are not looking at your financials regularly or not able to read them, then you could be missing out on ways to increase revenue and profit for your business.
Not Having a Backup
Whether you choose to keep your books digital or physical, having a backup is vital to ensuring that your records are safe. There is always a chance that something will happen, and having a backup of all your expenses and records can ensure that you are safe in case of an emergency. As the world is moving to the cloud, it has become more important to make sure you are using cloud based apps for your books. Need help choosing one? Book a call here to get help on what solution is the best for you.
Classifying Employees Incorrectly
It is vital that you know the difference between independent contractors and employees. Not knowing or incorrectly classifying them puts you at risk of steep fines from the IRS. It will also help you avoid misfiling and overpayment of taxes.
Hiring an Inexperienced Bookkeeper
We know it’s tempting to hire a basic employee to keep your books; however, hiring an inexperienced bookkeeper can be just as bad as trying to squeeze it into your own schedule. You get what you pay for, so take the time and money to hire someone with experience keeping books.
Not Hiring an Industry Expert or Proactive CFO
E-commerce and consumer goods companies have complex financial problems that come their way. Inventory tracking, cost of goods sold calculation, revenue from different channels, and manufacturing chargebacks are some of the few challenges that companies within this industry face.
Hiring someone that does not speak or know the knowledge within the industry can harm your company and your books. If you don’t have accurate financials, how can you run your business and make business decisions?
You don’t want to waste your resources on hiring just a data entry person. Hiring a proactive CFO earlier on in your business instead will help you grow.
Bookkeeping is a necessary part of business. However, it doesn’t have to be as time consuming or difficult as it seems. Make the investment in yourself and your business by keeping better records and seeking help to keep your books perfectly accurate. Rather than putting off your books until the last minute, take charge and make those books work for you.
For more information about how bookkeeping can help your business, click here to schedule an appointment with an expert.