Are you keeping your books on your own? Do you feel that you might be making some small business bookkeeping errors? If so, don’t panic.
There are many things that you can do to help make sure that every entry is right. Keep in mind though that even professionals make mistakes. So don’t feel horrible if it happens to you.
Nevertheless, let’s look at bookkeeping errors that you must always avoid.
1. Mixing Personal and Business Finances
This can make it difficult to keep track of business expenses and can lead to tax implications. Make sure then to open a separate bank account for your business and use it exclusively for business transactions. This will make it easier to track common business expenses and ensure that your financial records are accurate.
2. Failing to Keep Receipts and Invoices
Another common bookkeeping mistake is failing to keep receipts and invoices. This can make it difficult to track expenses and could result in missed tax deductions.
Make sure to keep a record of all receipts and invoices. You can do this electronically or by using a physical filing system. Make sure to keep them organized and easily accessible.
3. Forgetting to Reconcile Accounts
This can lead to inaccurate financial records and could result in costly errors. Reconciling accounts involves comparing your financial records with your bank statements. By doing this, you can ensure that the records match.
Make sure to reconcile your accounts regularly. You can do this monthly or quarterly. This depends on the volume of transactions your business has.
4. Not Tracking Cash Transactions
Cash transactions are easy to forget or overlook. But they are just as important as any other type of transaction. Failing to track cash transactions can lead to discrepancies in your financial records.
Make sure to track all cash transactions. You can do this by keeping a record of receipts or by using a cash register. Or, you can try choosing bookkeeping software to handle the task for you.
5. Misclassifying Expenses
Misclassifying expenses can lead to inaccurate financial records. This in turn could result in missed tax deductions. For example, classifying a business expense as a personal expense could lead to tax implications.
Make sure to carefully categorize all expenses. Use accounting software to help you track expenses and ensure that they are correctly classified.
6. Failing to Plan for Taxes
Failing to plan for taxes can result in unexpected tax bills and penalties. It’s important to set aside money for taxes throughout the year, rather than waiting until tax season to pay.
Make sure to plan for taxes throughout the year. Set aside a part of your income for taxes and consider working with a tax professional. You can check out the bookkeeping services linked here for reference.
Avoid Small Business Bookkeeping Errors
For small businesses, bookkeeping mistakes can end up costing a lot. By avoiding the small business bookkeeping errors listed above, you can save your business from a lot of trouble.
Staying organized with bookkeeping can be difficult. So make sure to check for any errors regularly. Reach out to a certified bookkeeper for the best results.
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