No matter how small your business, bookkeeping is an integral part of running it successfully. However, for all the things you need to do in order to have good bookkeeping practices, there are plenty of opportunities for mistakes. If you know the potential pitfalls, you're much more likely to avoid these bookkeeping mistakes:
You may like the idea of going paperless and storing all your important invoices and documents digitally, but your mistake is not keeping backups. There are a lot of things that can go wrong, resulting in years of documents disappearing. Even if you don't want to keep physical copies, you should have multiple copies of your digital files stored in a secure location.
Failing to Deduct Sales Tax
This oversight is a particularly common mistake in retail businesses. If you don't deduct the sales tax from the total sales amount, you'll end up with a higher total sales amount without lowering the amount of taxes that are due.
Not Tracking Reimbursable Expenses
Failing to track these expenses is particularly common among small businesses where a lot of expenses are paid right out of pocket on the owner's personal credit cards. However, by not tracking these expenses, you're forgoing money you won't get back after you start to turn a profit. Track expenses so that they can be reimbursed in the future, even if it isn't going to happen right away.
Neglecting Petty Cash Tracking
Petty cash can be a headache that sometimes it might be better to avoid. However, if nothing else, a system should be set up so that when someone in your business takes petty cash to do anything at all, they fill out a slip. When the petty cash fund runs out and the slips equal the original amount, refill it. Not tracking petty cash can lead a business to hemorrhage money pretty quickly.
These bookkeeping mistakes are just some of many that you can make when first getting a business started. Don't hesitate to ask for help when you need it! For more tips, tricks, and mistakes to avoid, contact us today.