Most everyone is guilty of these three common bookkeeping mistakes. Being you’re own bookkeeper can be tough. Business financials are a source of stress to many, but they don’t need to be. If you face your books with the same determination you face your competition, you will be in great shape!
1. Not keeping receipts.
Are you guilty of spending and forgetting? The IRS needs receipts to verify expenses, so keep those receipts. If you are always losing them, keep an envelope or folder in your car, home and desk to collect them in. When you are ready to update your books, they are all there for you, your accountant and your bookkeeper.
2. Not using categories of sales and expenses in your accounting system.
The categories of expenses and sales is called your Chart of Accounts. This is a great tool not many use correctly. These categories can be as detailed as you want and broken into sub-accounts, so if you want to know which service has the highest sales rate or which month you sold the highest amount of a product, you can easily run a report and get the information. If you don’t initially categorize your expenses and sales in the correct category, you will not have useful information like that available to you.
3. Not outsourcing what you can’t do.
If you simply don’t have the time or energy to learn all about your accounting, hire someone to do it for you. Most of my clients actually save money by outsourcing their finances. This is because they have more time and energy and they rest easy knowing they will have accurate, meaningful financial data. This helps them run their business better and make more informed decisions about their company’s future.
If you are making any of these common errors, they are easy to fix. You will be glad you made the change!