7 Common Bookkeeping Mistakes Small Businesses Make

 

1. Mixing business and personal

It’s important to have separate bank accounts and credit cards for business use only. This will make for easy bookkeeping and tax preparations at year-end.

If you don’t keep separate funds, you could easily miss out on sizable tax deductions! Start early on and make an effort to keep things separate!

2. Not keeping receipts

Keeping business receipts is a must! Receipts make bookkeeping easier especially if you are making a lot of purchases. Download an app to keep your receipts for you and tag each receipt with a brief description.

Your receipts will come in handy if the IRS decides to question your return. You will have all of the documentation /proof of your write-offs!

3. Not setting up a proper bookkeeping system

Setting up software and accounts that correspond to your type of business is ESSENTIAL. If you don’t have prior business start-up experience or accounting experience, hiring a bookkeeping firm is your best bet. We can help by:

• Setting up the entire chart of accounts customized to your business
• Enter any transactions/beginning balances that have already taken place
• Provide a daily/weekly list of items to do to keep on top of things
• Oversee your work on a monthly basis

 4. Not Reconciling your bank account

What does this mean? It means matching what is in your bank account to what is on your books and then accounting for anything in between.

Keeping your books up to date keeps you in control of your financial position. Reconciling on a monthly basis is recommended.

5. Doing your own accounting for too long

 

If growing your business is a goal, outsourcing your bookkeeping should be your first step! As a business owner, you have a lot of responsibilities. Don’t let the stress of keeping up with your books hold you back from making your business what you want it to be. Hiring a bookkeeper will pay off in the long run by saving you time, money and costly mistakes!

6. Not looking at your financial statements on a regular basis

The whole purpose of accounting is so that you can look at the big picture at the end of the month. Do you know what your net income is or what a balance sheet represents? Your financial statements are very important tools to help you understand how much money you are making, spending and need in the future. Bookkeeping isn’t just for tax purposes; it’s also for planning purposes.

7. Inaccurate collecting and reporting of sales tax

Do you know if your services are taxable? Not collecting/reporting accurate sales tax can be a costly mistake! A bookkeeper can get this setup for you so that the process is seamless.

 

Call, text or email Sabin Bookkeeping Solutions today for a free consultation!