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If you don’t have a good bookkeeping system in place then your business accounting is going to be in trouble. This year tighten up your bookkeeping system so that you have an easier time managing the books and accounts, and paying the taxes.
Poor bookkeeping points to poor financial management, and that’s not how you want to run a business.
Here are 7 bookkeeping mistakes you don’t want to make.
1. Shoebox Bookkeeping
If you want to know what you are doing wrong in bookkeeping, then ask yourself if you are shoebox bookkeeping. This usually involves taking an empty shoebox and putting, throwing, or dumping, your financial paperwork in the box.
Shoebox bookkeeping is not bookkeeping.
2. Manual System and Spreadsheets
A manual book system and spreadsheet is a good way to track financial information. However, spreadsheets fall short when it comes tracking where your funds come from and go to.
Spreadsheets are great from simple tracking, but complex tracking where funds are being transferred back and forth, from and to multiple accounts, makes it difficult to keep track through spreadsheets.
It’s better to utilize a bookkeeping software.
3. Not Being Involved
As a business owner, delegation is a key way to get things done. You don’t have to know everything, but you should know enough to understand what’s occurring. This applies whether it is marketing, sales, app develop, or accounting.
Not being involved in the bookkeeping of your business would be a big mistake. Be involved and learn. Even if a professional accountant sets up your bookkeeping system, you should know it in and out. This is especially vital if you need to find something on your own, or you are hiring another accounting service.
4. Not Reconciling Accounts
Through reconciling, your business is able to match the statements in your financial accounts to the general ledger in your bookkeeping system. It is a simple step to prevent mistakes in your bookkeeping system, creates awareness of your cash flow situation and averts failed payments or bounced checks.
5. Combining Personal and Business Funds
When you run a small business or a one-employee business, combining your personal and business funds removes the processes of opening up a business account and all that goes along with it.
Bookkeeping, accounting and filing taxes can get quite messy when you combine your personal and business funds. You may miss out transactions and misfile financial papers. This can have severe consequences and you may be breaking the law. Corporations are expected to maintain a separate account from any personal account.
6. Lack of Digital Bookkeeping
More and more financial trails and transactions occur through digital mediums. Your bookkeeping system should be equipped for this. There are a variety of accounting applications that synchronize with your business’s mail and shopping cart to provide a streamlined bookkeeping system.
7. DIY Attitude
Learning bookkeeping is not a process of making mistakes and learning from them. Making mistakes will have serious implication for your accounting and bookkeeping system. You don’t want fines levied on your business for missed taxes or wrong entries.
The biggest mistake is not hiring a professional accountant. Get in touch with ATS Accounting avoid these mistakes and more!