6 Bookkeeping Mistakes That Are Costing Your Company Money

Bookkeeping is a major headache you have to deal with as a business owner. It’s also one of the most important things in ensuring that your company is making money. There are a lot of bookkeeping mistakes you can make that are costing your company money. Here are six ways to help you avoid them.

Don’t Do all the Bookkeeping Yourself

Proper bookkeeping takes a lot of time, and unfortunately, you only have 24 hours in a day. That’s why you should never try doing all of the bookkeeping yourself. Money management is important, but there are also a lot of other aspects of your business that need your attention. If possible, get help with your bookkeeping and make sure that all of your key employees know how your bookkeeping system works. When your business is large enough, you can delegate bookkeeping to a specific professional to double check everything and advise you in business tax law. Just remember to limit access to your books as much as possible to safeguard your business.

Don’t Choose the Cheapest Bookkeeping Route

The cheapest route isn’t usually the best — you get what you pay for. That’s why it doesn’t make sense to buy the cheapest bookkeeping software available on the market. You need to do some research to find the best solution for your business. Many business owners don’t realize that there are more versatile alternatives to QuickBooks. For instance, with Sage One online accounting you can do all of your accounting and invoicing for free. Why pay for something if it isn’t truly better?

Don’t Combine Business and Personal Expenses

It’s common for business owners to use their personal bank account or credit card to pay for things in the startup stages of a business. However, this is a huge bookkeeping mistake because all of those transactions need to be sorted out before tax season comes along. Otherwise, you risk missing out on the tax benefits of business expenses. To avoid the problem, open a dedicated business account at a bank and complete all of your business transactions through that account. You can always deposit personal investment money if you need to in the beginning or take out a loan to protect your own assets.

Don’t File Your Own Tax Return

Business taxes are very complicated. You can file your own return, but it’s not a smart idea because there are all sorts of deductions you could overlook. Hiring a tax professional could actually save you money and help you avoid common tax mistakes that get attention from the IRS. Plus, tax professionals save you a lot of time because you don’t have to research answers to all of your tax questions. If you have filed your own business tax return in the past, have a tax professional double check it. There may be money that the government owes back to you.

Don’t Throw Away Your Receipts

Don’t get in the habit of throwing away your receipts. This practice is fine for most personal purchases, but it is never OK for a business, even if your purchase was for under $50. If the IRS were to question something on your tax return, your receipts would be the only way to prove where your money has gone. Receipts also make it easier to check up on bookkeeping errors made by your employees. Don’t throw away any documents related to your business.

Don’t Neglect to Audit Your Books

Every once in a while, you should carefully go over your bookkeeping records to make sure everything is consistent and matches your transactions. This reconciliation process should be done frequently to catch problems before they become too big. If you haven’t already hired a financial professional to help you with your bookkeeping, it wouldn’t hurt to get someone to take a close look at your books to make sure you aren’t missing anything.

As a business owner, you’ll constantly be consulting your financial records when making decisions. If your bookkeeping skills are not very good, your business is going to suffer. Plus, poor bookkeeping makes tax season even harder. Take measures today to start avoiding these common bookkeeping mistakes.