Every business owner knows that keeping up with their books is essential to maintaining an accurate financial picture of their company. Unfortunately, bookkeeping can sometimes be a tedious process that gets pushed to the wayside. Many people encounter issues with their books, and these errors can cost you a lot if you aren’t careful.
These five common mistakes can make a big difference in your bottom line!
Failing To Follow-Up On Late Payments
One of the most tedious and stressful parts of running a business is managing your accounts and late payments. When your accounts receivable has a late payment that hasn’t made its way to you just yet, you need to follow up on where it is and when you can expect to see that money in your bank account. One way to eliminate this scenario is to set up firm payment terms for services rendered so that your customers know what is expected of them.
Disorganized Receipt Storage
To claim expenses on your taxes, you need to have proof of the money you spent on various items throughout the year. This means that you need to hold onto your receipts for every business purchase you make. Come up with an organized system to file and store these receipts for easy access around tax time. This will make it much easier for you (or your accountant) to file your taxes and prove that your business write-offs are accurate.
Poor Record Keeping
Does it feel like you just have so many things to do that you’ll never reach the bottom of the list? Despite how busy you might be, you need to make sure that you are accurately keeping your records. If you are audited by the government, you will need to provide statements about your income and expenses. Keeping receipts on file is only one small portion of keeping detailed records about your finances.
Chances are that your bookkeeping is done electronically these days as opposed to with pen and paper. What would happen if your system crashed? Do you have a backup of your records that you can refer back to? While you may still lose a small amount of data, it will be much easier to restore your records if you keep regular backups.
Lack Of Communication
If you aren’t the person responsible for handling your bookkeeping, you need to emphasize clear communication. Keep your bookkeeper in the loop when you make purchases, receive major accounts, or otherwise have an influx of cash. This will allow them to create more accurate financial statements so that you can see how the business is doing in real-time.
Trust The Professionals
Are you ready to hand over your bookkeeping to the professionals? Compass Accounting is ready and waiting to help you make the switch to a professional service to save you time and money.