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7 Bookkeeping Mistakes You’re Making
Intro
Many businesses make mistakes in their bookkeeping. Keeping yourself on the right track will help ensure the success of your business. After fixing these simple mistakes in your business, you will see incredible improvements.
Problem #1 Not Saving Receipts
“Receipts related to your business need to be kept if you are going to receive tax deductions.”
Solutions:
Online: With the use of technology, we can avoid the need for holding onto receipts. Applications like Google Drive, Hubdoc, or your bookkeeping software are great options. Any other cloud storage you may be using is sufficient if you prefer them. Cloud storage of your receipts ensures their safety while also making them easily accessible on all your devices.
Physical: Keep your physical receipts in a specific place, like a cabinet, drawer, or box. Ensure every receipt related to your business makes it there and is separated by year and month, if possible. There is a danger in only having physical records from the potential of them being lost, stolen, or destroyed.
Problem #2 Personal Transactions on Business Accounts
Solution: This is an easy mistake to make. It may seem harmless, but it could wind you up in some trouble. The good news is that it’s easy to fix, but it will require more work and time. All you need to fix this mistake is to reimburse your business with your money or record your transactions as an “Owners Draw.”
Problem #3 Not Reconciling Accounts
Solution: This is an essential part of your Bookkeeping Process. Reconciling is done by comparing your bank statement and what your bookkeeping records show for a given month. You may find transactions you missed, double entered, or even for services you are not using anymore. It’s best to reconcile every month to keep on top of your records. Having everything fresh on your mind will allow the process to be quick and stress-free.
Problem #4 Taking on Your Bookkeeping Yourself
Solution: Your bookkeeping will grow more complicated and time-consuming as your business grows. Your time may even be more valuable in running your business than doing your books. At this point, it will become worth your money to outsource your bookkeeping to a Certified Bookkeeper.
Problem #5 Classifying Transactions Incorrectly
Solution: Correctly, Classifying your transactions is extremely important to your business. Classifying your transfers between accounts as income will mean you pay more income tax; This is what we don’t want to happen. Being unsure how to classify an expense will make inaccurate financial reports to base critical business decisions. It’s important to research how your transactions need to be classified in your chosen accounting method. That way, you can keep everything organized and accurate.
Problem #6 Being Inconsistent
Solution: Having a system for your bookkeeping is going to be a key element to your business. Its best to input transactions as they happen. Updating consistently will ensure you never fall behind, and minimal time is spent in a day doing bookkeeping. Monthly should be the most extended period in your bookkeeping. If any longer, you will risk forgetting vital info needed to process transactions.
#7 Using Cash Instead of Debit/Credit Cards
Solution: Using cash can be very convenient or even quicker. For your bookkeeping sake, it will be much easier, in the long run, to use your business debit/credit card for every transaction. Your Bookkeeping software has the potential to be integrated with your Bank transactions. You are saving yourself from the trouble of inputting your transactions and leaving you with the simple task of classifying it correctly.
Conclusion
Now, I would love to discuss your situation and how I can serve you and your business. I’d love to get to know your business. I will only select a handful of businesses to serve. These are people like you! If you choose to take this information and give it a shot on your own, I wish you the very best! However, you really should do yourself and your business a favor and, at the very least set up a free consultation
I hope that this information has been helpful to you and inspires you to take action.
Braden Hallman - Digital Bookkeeping Professional
