Bookkeeping Mistakes Small Businesses Make

Small businesses owners often find themselves wearing many hats, one being “bookkeeper”. With so many other things to focus on, bookkeeping may feel minuscule, causing you to make mistakes when managing your accounts. Here we address the 5 most common bookkeeping mistakes, and how to avoid them!

Procrastination

Owning a business is no small feat. Understandably, bookkeeping is often put on the backburner while business owners work to grow their company, overcome challenges, and handle day-to-day tasks. Getting behind on bookkeeping tasks makes it that much harder to tackle when things pile up. Having a day or two set aside each month for bookkeeping tasks is a good way to help you stay organized and reduce the chances of you getting really behind on your businesses bookkeeping.

Getting Rid of Receipts

Many businesses do not keep receipts because the IRS does not require them for expenses under $75. However, it is important to keep track of all transactions and documentation in the event of an audit, and for tax deductions. Consider some sort of filing system – both digital and paper – to keep track of all receipts, so you know exactly where they are whenever you need them. The longer you put it off keeping and organizing receipts, the harder it will be should the day come when you need them.

Reconciling

Reconciling your bank statements may seem like a hassle, but really, it could save you time, money, and headaches. When you take the time to reconcile your statements each month, it gives you the opportunity to check for missed transactions, errors, and overdrafts that could affect your business and your records. When you reconcile, you are able to pinpoint exactly how much money you have and how much you’ve spent, so you are aware of the financial health of your company.

Not Having Appropriate Backup

With digital services taking over, it is important to always have the right backup for all of your records and data. Your information should be accessible to you both on paper and digitally. If you have a computer issue, not having your files backed up could be detrimental to your business. It is recommended to regularly backup your data and keep a paper version of your files of at least 7 years.

Mixing Accounts

A common mistake many owners make is combining their personal account with their business account. This can blur the lines and make it difficult to determine which money belongs to the owner versus what belongs to the business. Mixing the two accounts can also lead to difficulty when tax season comes around. Best practice is to have separate accounts so there is no confusion or concern about either account.

Avoiding common bookkeeping mistakes can be difficult, especially when you are also trying to run a business. That’s where Warren Accounting Group comes in and helps! Our team can take your receipts, checks, statements, and invoices, and provide you with monthly, quarterly, or yearly financials – so you always know where your business stands. Our firm stays up to date on all laws and codes, so you will always be in compliance. For more information about Warren Accounting Group’s services, contact us today for a consultation at 252-827-5259.