Small Book-Keeping Mistakes Have Large Impact

A business’ books can often be the best indicator of where the company is and where it’s heading. Maintaining good books can help your company plan for the future and make better financial decisions down the road.

Yet, if you asked a group of business owners what the most mundane and time-consuming part of their job is, bookkeeping would probably be at the top of most people’s list. While good bookkeeping is essential to all businesses, many business owners don’t make it a priority – placing their business in danger of financial problems.

Are you concerned you might be putting your company at risk?  Here are some common bookkeeping mistakes and how you can dodge them.

 

 Combining Business and Personal Funds

When it comes to your personal and business expenses, it’s best to always keep them separate. As a business owner, you don’t want to develop the habit of repeatedly making business purchases with your personal bank account. Doing so creates a bookkeeping nightmare, and could undermine the protection of your personal assets provided by your legal business entity.

To avoid creating a bookkeeping headache, or endangering your personal property, maintain separate bank accounts and establish strict usage rules for each. Doing so will also make life a little easier when tax season rolls around.

 

Not Reconciling Regularly

Reconciling your books with your bank transactions allows you to monitor your financial situation accurately.  When transactions fail to match those recorded in your books, it could lead to financial decisions based an incorrect information.  Reconciling your books could also help you catch recurring charges or mistakes that should not have hit your account.

 

Throwing Away Receipts

It’s common for most people to throw out receipts for personal items that don’t hold much significance, but any business expense – small or large – should always be properly documented with receipts.

While it’s easy to misplace receipts when you need them the most, storing them properly or scanning them into a phone or computer can help make completing your taxes easier and save you time in the long run.

 

Failing to Bring in the Experts

As your business continues to expand, handing off your bookkeeping to a professional can help you focus on the activities that will grow your business and avoid wasting time on tedious tasks you are not skilled in completing.

While these easily forgotten bookkeeping mistakes happen quite frequently with many business owners, understanding how you can fix these inaccuracies in the future can help you avoid chaotic financial situations and keep your business on the right track to success.