For most business owners, bookkeeping is like a trip to the dentist – it’s not particularly pleasant (in fact it can be quite painful at times!), but it’s critical to the long-term health of the business.
Unfortunately, many business owners don’t give bookkeeping the attention it demands, and as a result end up facing self-inflicted problems. Today, we’re going to examine five common mistakes that business owners make regarding the bookkeeping process. Are you making any of these?
1) Ignoring the books for months at a time. It’s tempting to keep putting the books off for another day… or for another week. But before you know it, it’s been months since you updated your books, and now the task is impossibly large. Discipline yourself to take care of your books on a regular basis.
2) Failing to properly document expenses. It’s very important to properly document your business expenses for a number of reasons. Most immediately, it’s necessary to have your expenses documented for tax purposes. But it’s also critical from a strategic perspective to know how much you’re spending, and where. Are you tracking all of your expenses?
3) Not recording all invoices or payment requests. In the early stages of running a business, it’s easy to keep track of the payments that are owed to you in your head. Of course you won’t forget who owes you money! But as your business grows, it’s essential that you have a system of tracking your accounts receivable. This is necessary for tax purposes – but even more importantly, to be sure that you get paid for your work!
4) Failure to properly record and/or withhold payroll taxes. Payroll taxes can be difficult to track and administer. It’s critical that you have a system in place so that you don’t find yourself in hot water come tax time!
5) Lack of fraud protection. Employee fraud is a major threat for small businesses, but proper bookkeeping can dramatically reduce your risk. Do you know how to read your company reports and what they mean? Are you monitoring your books for unusual patterns or employee activity?
If this sounds overwhelming, I’ve got good news for you: I can help! If you’d like to learn more about the bookkeeping services I provide for small businesses, please contact me today!