Five Costly Bookkeeping Mistakes Made By Businesses
What’s the most important path to success in business? To find “answers” to this question, all you have to do is browse the book kiosk in any major airport. People are always trying to understand the parameters of success, and offering new ideas has become a thriving business in its own right.
But for all the flashy books out there, there are certain rudimentary principles that will always be a contributing factor to the success of any business. Effective and accurate bookkeeping is one of them. If you could add up all the money lost by American businesses each year due to mistakes in this area, the dollar figure would be astounding.
Effective bookkeeping for businesses becomes much easier when you know about some of most common bookkeeping mistakes made by businesses. By studying what not to do, it’s possible to develop better bookkeeping habits across-the-board.
1. Throwing away valuable receipts
Businesses sometimes make the mistake of throwing away a great number of useful receipts, often times because the amount is $75 or less. But when it comes to filing taxes, and the possibility of facing an audit, too much documentation is always better then not enough.
2. Not distinguishing properly between employees and contractors
Knowing who is actually an employee of your company and who is not may seem like the most obvious thing in the world. But actually, it’s never been more difficult. The average business relies more than ever on contractors and freelance professionals to meet various needs. If a business does not make the proper distinctions when it comes time to file taxes, a number of financial disadvantages and even legal problems can result.
3. Not communicating clearly with the bookkeeper
As a business owner or manager, it’s usually a great idea to make use of professional bookkeeping services. But even the finest bookkeeper will not be able to track your finances accurately it you don’t make everything transparent. Withholding key information from your bookkeeper, whether intentionally or not, is a common and costly mistake.
4. Waiting too long to balance the books
Businesses who balance the books only a few times a year are much more prone to bigger and more costly bookkeeping errors. The process of bookkeeping is much more effective when conducted at least monthly, with no exceptions. This allows small problems and discrepancies to be identified immediately, and prevents them from turning into serious bookkeeping mistakes.
5. Going DIY
There are actually hundreds of different bookmaking errors that occur all too often in the business landscape. And there is one effective way to prevent the vast majority of these errors from ever occurring. That is finding hey highly skilled and reputable professional to take the guess work and stress out bookkeeping.
Finding a bookkeeper you can count on
Let’s face it, there are dozens and possibly hundreds of bookkeepers in your area. But this isn’t an aspect of your business that you want to be handled by just anyone. Focusing on bookkeepers with solid reputations, expert training, and clear fee structures will maximize your chances of bookkeeping success in the years to come.