Whether your business is large or small, no business can escape the tedious task of bookkeeping. Although it may not be the most fun part of your workday, small business bookkeeping is an essential function when it comes to maintaining the success of your small business.
How Does Bookkeeping Work?
There is more to bookkeeping than inputting numbers into a spreadsheet. A bookkeeper can be your best advocate when it comes to helping your business survive an audit. Traditionally, a bookkeeper is responsible for preparing four documents:
- Income Statement
- Balance Sheet
- Cash Flow Statement
- Statement of Changes in Equity
With their hats in many bags of your small business, it is easy for mistakes to occur. Let’s look at 8 common small business bookkeeping mistakes, and the steps that can be taken to avoid them in the future.
8 Common Small Business Bookkeeping Mistakes
- Neglecting Reimbursable Expenses Tracking: Failing to track your small business reimbursable expenses is like flushing money down the toilet. Not only does this have the potential to lose your business money, but it can also cause you to lose out on essential tax deductions. If possible, try to track expenses as they are accrued–the longer you go without tracking, the more likely your expenses will become overlooked.
- Failing to Keep Paper Copies: Although most businesses have gone completely digital when it comes to financial management, keeping paper records is still just as important as it was 30 years ago. Taxing agencies like the IRS want to see a paper trail that includes clearly visible documentation and a well-organized system of paper backups. Apps that save your receipts can make day-to-day operations easier, but it’s still important to keep a backup of your financials for at least seven years.
- Mixing Up Business v. Personal Expenses: These types of expenses must be classified accordingly. If you are unsure about a certain transaction, call your CPA–a 5-minute phone call has the possibility to save you adjusting a year’s worth of expenses.
- Not Saving Receipts Less Than $75: Receipts under $75 provide documentation for a variety of deductions that these purchases can be claimed as deductions. Many online and digital accounting programs have accompanying apps that allow you to snap a picture of your receipt and associate them with the appropriate registry entry.
- Failing to Communicate With Your Bookkeeping Team: Whether you have an in-house bookkeeping team, or you choose to outsource your business’s finances, it is essential that you communicate account changes. By communicating with your small business bookkeeping team, you are able to minimize errors and keep accurate results.
- Not Reading Your Business’s Financial Statements: Your business’s financial statements will include important information that is critical to your business’s success. It is important to make good practice of reading these statements.
- Procrastinating Your Bookkeeping Tasks: As an owner of a small business, there are often many different tasks that need to be performed on a daily basis. Putting off your business’s bookkeeping can cause your business to meet important tax deadlines, or can cause expenses to be missed entirely. It is important to log your business’s expenses as they are incurred.
- Not Hiring the Help You Need: Most small businesses hate managing their books by themselves, but they refuse to outsource their services. Professional bookkeepers have the required skills to do the job quickly and efficiently, and they have the necessary expertise to locate subtle errors that might otherwise be missed. As professionals, they’ll also be aware of the tax changes that could affect your day-to-day financial practices. In the long run, having a second set of eyes on your financial records is extremely beneficial and will save you time and money.
Tips When Looking for a Small Business Bookkeeper
Finding the right small business bookkeeper may be challenging. There are many different types of small business bookkeeping services, but there may only be one right fit for your business. Here are some factors to keep in mind when it comes to looking for a small business bookkeeper.
- Hire Someone With Attention to Detail
- Ask for a Referral From a Trusted Source.
- Consider the Accounting Software They Use
- Hire Someone Who Understands Your Business
When starting your business, investing in continuous improvements of your business’s bookkeeping is something that will continue to help your business grow. With the extra support that payroll services can offer your business, you have the possibility of keeping accurate business records that can prevent unwanted difficulties for your business. If you are looking to have experts review your business’s books, using a bookkeeping service might be the right choice for you.
Limitless Business Payroll Services in Gilbert, Arizona.
Looking for a bookkeeping service in Gilbert, Arizona? Limitless Investment and Capital offers a variety of skilled experts qualified to assist your business’s needs. Rather than struggling to manage your company’s books, focus your efforts on a piece of your business that only you can. Our goal is to provide you true accounting freedom. Interested in a free financial analysis? Contact us today to get started!