For small business owners, there are many common bookkeeping mistakes that can be crippling to your business and your financials.
Whether your business is a one-man operation or a major public company, bookkeeping is part of the equation. Here is a look at five of the most common mistakes and how to avoid them.
1. Discarding Receipts for Small Purchases
Although the Internal Revenue Service recommends keeping all of your receipts, along with a whole slew of other business-related documentation, many business owners choose to keep only receipts for purchases over $75. While receipts for smaller purchases are not required, they can be valuable in providing documentation for many tax deductions. Discarding them can lead to a bigger tax burden.
How to Avoid It: Save all of your receipts, regardless of the amount. Keep them in a well-organized file so that you are prepared in the event of an audit.
2. Failing to Separate Business and Personal
Being a small business owner sometimes means using your own funds for business-related expenses. Even though that is sometimes a necessity, failing to separate your business expenses and accounts from your personal ones can prove disastrous for bookkeeping.
How to Avoid It: Create a separate business bank account designed for small business owners. Use it only to conduct your business, and for nothing personal. If you do use your personal funds for business expenses, keep very clear records so that you do not miss out on the tax savings.
3. “Do It Yourself” Bookkeeping and Leaving it for the Last Minute
If you do not know what you are doing, bookkeeping can be a nightmare. Many small business owners still insist on doing it themselves, but they put it off until the very last minute. Then they are left with piles of receipts, and the potential for errors shoots through the roof.
How to Avoid It: Hire a professional. There are plenty of things you can successfully do yourself to save money in your small business, but bookkeeping should not be one of them. Find a bookkeeper who understands the needs of your company and can help you avoid common pitfalls.
4. Not Communicating
In bookkeeping, communication is key. Whether your bookkeeper works remotely or is on-site, failing to communicate your financial actions and decisions with them is one of the common bookkeeping mistakes.
How to Avoid It: Communicate! If you give an employee a bonus, tell your bookkeeper. If you dip into the petty cash for a business lunch, tell your bookkeeper. It can be helpful to have a conversation with your bookkeeper about expectations and what information they need from you.
Let B&B Bookkeeping Take it from Here
Now is the time to take the burden of bookkeeping off of yourself. B&B Bookkeeping can take it from here. We assign a bookkeeper to your business, and they will track your business expenses, update your books, and monitor your financials. No more stress about making any of the common bookkeeping mistakes.
We use QuickBooks™ to remotely work with your payroll providers, financial institutions, and merchant providers, allowing you to focus on your business without worrying about the bookkeeping. We serve clients from Salt Lake City to Provo, Utah, and all along the Wasatch Front. Contact us today and get your first month of bookkeeping free!