Business Bookkeeping – Avoid These 9 Mistakes

by Oct 8, 2019Blog

Many small business owners opt to do their business bookkeeping in-house with the help of administrative staff. This makes sense when you’re on a tight budget or when you don’t have enough work to justify hiring a full-time bookkeeper.

However, if you choose to keep the books yourself, be aware of these 9 common business bookkeeping mistakes:

  1. Failure to reconcile transactions with the bank: Your cash flow depends on more than just payments received and expenses. You may also incur bank service or interest charges that should be entered into your books on a regular basis.
  2. Classifying your accounts incorrectly: Having a clean, clear chart of accounts will save you a lot of time when preparing year-end taxes.
  3. Recording transactions under the wrong account type: Transactions such as  business permits should be considered assets, not expenses. Using incorrect account types can muddy your balance sheet.
  4. Not using accounts when appropriate: This mistake is most common when withholding taxes; the amount withheld should go into its own account so that the original account is accurate.
  5. Failure to monitor petty cash: Unrecorded transactions can lead to discrepancies and confusion down the line.
  6. Allowing employee advances to slide: If you allow employees to take advances against their payroll, it is important to make sure the funds get replenished at the agreed upon time.
  7. Incorrect dates: Whether entering new bills or sending invoices to customers, having the correct dates on transactions will help maintain good cash flow and ensure more accurate reporting.
  8. Not tracking reimbursable expenses: Reimburse out-of-pocket expenses to maintain a more realistic income statement.
  9. Failure to communicate: When business owners make verbal agreements and fail to mention them to the bookkeeper, transactions can be recorded incorrectly.

Outsourcing your business bookkeeping is a good way to ensure that it is done properly and in a timely manner. It will also save you time and will not not require the larger investment of employing a bookkeeper. Contact Next Level Accounting & Tax today to learn more about how we can help you with business bookkeeping.