No matter the size of your business, bookkeeping plays a major role in ensuring your financial health. It might not be a particularly exciting or glamorous task, but it is essential to your success.
Therefore, it is important you prioritize accuracy in your bookkeeping at all times. Here are a few of the most common bookkeeping mistakes made by small business owners that you should be certain to avoid in your everyday work.
- Not saving small receipts: While you might not be required by the IRS to save receipts valued at less than $75, these small purchases can add up over time and will give you documentation for any deductions you wish to claim. Simply establishing a folder for these receipts is an easy way to get yourself organized long in advance of tax season.
- Not classifying employees correctly: This tends to be a problem for companies that make use of any combination of freelancers, consultants, employees, and contractors. Having so many different kinds of employees can make it challenging to determine who is on staff and who is not, which can lead to mistakes come tax time. Make sure you have all of the people who work for you classified under the correct category for tax purposes.
- Failure to perform monthly reconciliation: Every month you should make it a point to reconcile your books with your bank statements. There are a lot of businesses that simply skip this task, or will make errors by doing it incorrectly. Working with a professional bookkeeper can eliminate these simple errors.
- Not keeping backup records: It’s always good to keep physical documentation just in case something happens at your office and you lose your electronic data. If you’re ever audited for any reason, having these physical documents can be extremely helpful to you.
- Not tracking reimbursable expenses: Small business owners frequently pay for many business-related expenses out of their own pockets with their personal credit card but do not track these expenses. You have the ability to be reimbursed for these expenses, so make sure you submit those expenses to your company, reimburse them and keep track of all of the reimbursements you give out and/or receive.
- Trying to do everything yourself: As a business owner, you have plenty of other things to worry about beyond trying to keep track of your finances yourself. This is a job better delegated to another person who is trained in those tasks so you can focus on other important areas of your business.
Also, read: Tips for keeping yourself organized during tax season
For more information about common bookkeeping mistakes and how you can avoid them, contact our skilled financial team at MCG Solutions today. We look forward to working with you!