Bookkeeping is one of the trickiest jobs that needed to be done accurately. It can be time-consuming and prone to make common bookkeeping mistakes. Even the slightest mistakes can cost you valuable time and money.
Bookkeeping is something that should be done on a timely basis. You should devote enough time to close your books at least monthly. You should maintain and ensure error-free books. Outsourcing your bookkeeping to an expert can help you eliminate this problem.
Having an experienced professional look into your finances can be extremely beneficial to your business. They will be aware of necessary tax regulation that applies to your business and do the needful to be compliant.
Here are some of the common Bookkeeping mistakes
- Doing it yourself
Most business owners think they can do bookkeeping without extensive knowledge. Since it needs time to get things done most business owners tend to procrastinate and fail to close their books every month. This can cause a pile-up which makes it even more complicated.
- Using the same account for personal and business expenses.
Using your personal card to pay for your business expenses is not advised. You should have separate bank accounts for your personal and business expenses. This makes it easier to track your expenses. If you ever have to make a payment for your business you can reimburse the amount.
- Inaccurate records
You should be keen on record-keeping if you run a business. all the necessary financial information should be documented timely. The chances of forgetting about a small expense or misplacing a receipt are high. You should take care of all your business transactions and document them properly at least once a month. These records will back you up in case you ever get audited by the IRS. Ultimately saving a huge amount in penalty
- Wrong classification of expenses
Tracking income and expenses is something that needs to be done carefully. Income and expenses should be tracked accurately under the categories they belong. You might get in trouble If you lack enough knowledge in bookkeeping and various categories.
- No data backups
Most businesses are dependent on accounting software and other technologies. Anything could happen to your data in case of any system malfunctions. You should always back up your data on a timely basis to avoid any data loss.
- Poor Petty Cash Management
Small business owners face a hard time tracking petty cash of their business. Make sure you track the cash on hand for the business and how it is used. Buying a petty cash lockbox and getting receipts for your expenses makes it easier to easier track your petty cash.
- Overlooking sales taxes
Making sure your business is compliant is something you can’t avoid while running a business. If you don’t report your tax while doing your bookkeeping, you might end up paying fines and penalties to the IRS.
- Poor communication
The bookkeeper should have positive communication with the business owner and employees of a business. This helps the bookkeeper to be aware of what is going on within the business and make financial statements to optimize your business operations.
- Failing to keep receipts
It is important to maintain all the receipts to track business expenses. Staying unorganized with the receipts can cause problems while you’re filing taxes. This can even trigger an IRS Audit.
- Neglecting Reimbursable Expenses
The reimbursable expenses of a business should be consistently tracked. Business owners pay for their expenses out of their pocket. These expenses can be reimbursable but often overlooked and can result in lost money as well as lost tax.
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