Business owners don’t always have the time, resources, or knowledge to invest in accounting or bookkeeping for their company. That can frequently become a recipe for disaster when it comes to managing your finances and understanding how to prepare for the future. Some mistakes are more common than others and can lead to slowing your business’s growth, negative audits, or damaging reputations with distributors, vendors, or even customers.
Avoid these common bookkeeping mistakes and keep your business running smoothly.
- Not keeping up with tracking your purchases, expenses, and incoming revenue
When your accounts receivable and accounts payable fall behind, transactions easily fall through the cracks. You can lose track of how much money that you have spent or money that has already been deposited. This can send your financial statements into a tailspin, setting you up for rushed late nights and mass confusion when it comes to your bank accounts.
Keep up to date on your financial transactions. If you can’t enter information daily, make sure that it is entered at least by the end of the week. Don’t let transactions sit for long periods of time without accounting for them in your system. Keep the same strategy with paying your bills. When you get behind on payments, it can negatively affect not only your credit, but also your relationship with suppliers.
- Not completing monthly balancing
At the end of every single month you should make sure that your books are balanced and all money in accurately accounted for. If you aren’t balancing your books at least once a month, you are playing a risky game when it comes to finding any errors months down the road.
- Relying on the wrong bookkeeper or accountant
It’s easy to assume that anyone can handle managing your books and finances but that couldn’t be further from the truth. By relying on someone under-qualified or by taking on too much yourself, your finances will not be able to get the attention they deserve. This can lead to red flags at the IRS, penalties, missed payments, or uninformed business decisions. When your data is correct, your reports will give you the information you need to move your business in the right direction.
- Not understanding your accounting software system
It is vital to set up your accounting software to best fit the needs of your business. Many business owners try to save money by setting up their system on their own, but later come to regret their decision. By setting up your system correctly the first time, you’ll not only save time, but will save money in the long run. Plus a professional can guide you when it comes to more advanced features and functionality that you may not even know exist. It is also a good idea to find a software partner that you can rely on to fully train your system users so they can more efficiently and effectively use their software.
Don’t make these time consuming and expensive mistakes. Rely on expert guidance from outside bookkeepers/accountants when needed and take the proper steps to move your business in the right direction.
If you need help or have questions about bookkeeping, contact the professionals at 360 Virtual Accounting. No matter if you need assistance from time to time, or would like someone to help you on a continuous basis, their professionals will work to meet your needs.