Bookkeeping Mistakes
Bookkeeping Mistakes

7 Bookkeeping Mistakes to Avoid

 

One of the biggest mistakes that businesses make is hiring a bookkeeper who is not capable of keeping up with the changes in the industry. If you want to keep your books accurate, you’ll need to hire someone with the right experience and the knowledge to manage financial reports, prepare a balance sheet correctly, and stay abreast of tax requirements. If you find yourself making this mistake frequently, you should consider hiring a more robust bookkeeping team.

Neglecting to track reimbursable expenses

If you run your own business, you should track your reimbursable expenses. Failing to do so can lead to lost money or missed tax deductions. Fortunately, expense tracking apps and programs are available to make it easier to keep track of every dollar spent. It is important to get into the habit of tracking expenses right away. Just as important as saving receipts, tracking reimbursable expenses will give you a paper trail in case you are audited. It will also let you keep track of the health of your business.

While you may be able to track all of your expenses in your software, you should pay close attention to reimbursable expenses. This is an important step to prevent overpaying taxes or not filing your tax returns correctly. Many small businesses neglect to track these expenses and instead choose to pay them out of their own pocket. In addition to losing money on forgotten expenses, this can damage the relationship you have with your vendors.

Mixing personal and business finances

While it may be convenient to mix personal and business finances, this can lead to tax issues and confusion. Maintaining separate accounts will prevent inaccurate reporting and will help you avoid IRS audits. Keeping business and personal finances separate will also help you avoid liability issues.

If you run a business, it is essential to separate personal and business expenses. Mixing personal and business finances is a big mistake that can lead to tax woes later. When possible, move money from your personal account to a business bank account. If you have employees or contractors working for you, classify them accordingly. It is also critical to maintain separate business and personal bank accounts.

Business owners often mistakenly mix personal and business finances. Personal expenses pile up under one bank account, making it difficult to keep track of the expenses. This can lead to important information being left out of the books. This can lead to inaccurate financial information, which can impact business decisions and increase taxes.

Hiring a bookkeeper who isn’t able to keep up

Hiring a bookkeeper is an important part of keeping your business up-to-date. If you don’t have time to do it yourself, outsourcing your bookkeeping to an outside firm can be a good option. However, it’s important to ensure that your bookkeeper is up-to-date with the latest accounting software and other technological developments. The right bookkeeper can advise you on which programs are best for your business, and will be able to help you migrate your data. Hiring a bookkeeper who’s able to integrate with other systems can help minimize data entry, and provide better insight into financial performance.

As a small business owner, you’re constantly being pulled in many directions. You’re trying to oversee your team, find new clients, and find ways to grow your business. Hiring a bookkeeper can take some of the burden off your shoulders and allow you to focus on other aspects of your business. However, it’s essential to have a clear idea of your expectations for your bookkeeper before hiring one.