While all businesses require bookkeeping as the backbone to their success, it can easily confuse due to its intricacies. Tax compliance, bookkeeping, and cybersecurity hotspots might be some of the more familiar bookkeeping pitfalls that too many small businesses are still in danger of counting against. But with the competition in today’s world, keeping your bookkeeping ability top-notch is essential to identifying lucrative opportunities and conclusions errors before they prove too expensive and can keep you running your business for years.
Dealing with your books is probably not your best skill set as a small business owner. This does not mean that every business owner needs to understand bookkeeping at an expert level, but such a precarious aspect of your business should not be on the shoulders of anyone who, ahem, is incredibly lax with math. Bookkeepers do more than just add and remove numbers. They also keep track of all the financial information a business needs to know simply.
This complete guide will review the most common bookkeeping and accounting struggles small businesses face and provide solutions for resolving them.
The following list describes likely bookkeeping mistakes and our tips for avoiding them.
Improper record-keeping
At times, we are dependent and only record a couple of the records we build. However, sadly, your business requires several ongoing activities, and keeping track of the smaller expenses can be quite hard as they can creep up on you without realizing then all these small ones start to turn into one large cost eating at your books. Setting up an organized file system is a better way to maintain a clear record. Also, it is advisable to keep proper records in case you get audited. This will save you time and money on your income taxes (or those of the company) as well.
Absence of backups
We now use technology as a means to archive most of our documents and data safely. You have all the information you need for your business with only one click. So we suggest you update your files every week or carry out timely backups at least biweekly, so it would never cause you a loss.
As a small business cloud backup solution, IDrive Team is a stellar option. It supports both remote employees and small offices, with a lengthy list of features.
The software provides five users with an account that includes 5 TB of cloud backup, which simplifies the management of a team rather than the need to manage five distinct accounts.
Inadequate communication
Communication is always the first order of business. Your bookkeeper should know precisely how your company operates. This will make accurate financial statements for your company.
Insufficient Staffing Classification
Is the brand-new renter an independent contractor or a wage earner? A simple mistake not only interrupts your records but also leads to misplaced documents and tax or document complications. Ensure to classify them correctly so you will not have to go through the process of personnel classification again. An easy-to-follow guide for differentiating your team.
Mixing personal and business purchases
Combined personal and business finances in an individual account can result in tax or bookkeeping complications that are more complex than need be. This can also lead to the oversight of important transactions. So, how is it simply solved? Get a business bank account and keep your expenses separate from your business expenses.
Delayed reimbursements
A sales book full to the brim is a beautiful thing, but it means nothing if your customers have not paid up yet. As a business, you expect to be paid for a service or product. You must set strict deadlines or conditions with your clients and chase up any late payments. Most of the accounting software includes a reminder function that warns you about your scheduled or failed payment. It also lets you know when a customer has viewed your invoice with the FreshBooks software, which spares you their excuses for delay in payments. And such a small firm can soon come to face a cash flow crisis.
Engaging in inconsequential activities
You, as an entrepreneur, believe that time is money. However, a significant number of business owners place insufficient value on their time and concentrate on time-consuming and tedious duties, such as bookkeeping, that are better suited for professionals. A competent bookkeeper will be aware of the necessary actions, the methods for recording data, and the organization of all the information that your business will generate.
These are some qualities that will be beneficial to you in the long run, whether you choose to continue performing accounting for your own business or hire an expert.
Maintaining order
Given that the role of a bookkeeper entails completing numerous repetitive and routine tasks, it is advantageous to maintain a high level of organization to complete these tasks promptly. You possess exceptional time management abilities, which enable you to effortlessly prioritize critical tasks and determine the highest priority tasks.
Effective communication abilities
It is anticipated that you possess a comprehensive understanding of the company’s financial operations, as you are responsible for managing its financial reports. You must be prepared to provide an explanation and address any inquiries regarding the figures, as a significant amount of information must be presented.
Boasting an acute sense of observation. You are also obligated to investigate the reasons why certain deductions on your accounts are higher than anticipated, as you are responsible for the financial reports of the business. In order to determine an appropriate solution to the issue, it is necessary to verify and analyze all relevant numbers.
Ensure that your bookkeeping errors are minimized. It is not uncommon for both novices and professionals to make errors in their bookkeeping on occasion. This is easily preventable if you observe some of the common errors you typically make and use them as a straightforward exercise to enhance your work skills. Compile a list of your errors and rectify them one by one until you have achieved the status of an expert in the field of accounting.
Make a plan in advance. In any field of employment, it is always beneficial to plan for the future. When reviewing your prior financial statements, it is typically possible to identify instances in which more proactive planning would have resulted in reduced tension and expenses. Identify and anticipate the significant expenses and probable business costs for the year, and incorporate them into your business plan.
Staying informed about technological advancements. A comprehensive understanding of data via the Internet and the utilization of spreadsheets to generate financial report charts is essential for numerous accounting tasks. It is also advantageous to be informed about the latest technology in your field, as certain bookkeeping systems can be accessed via a computer.
Online Bookkeeping Software for Number One Business Choices
Steps to choose the right online bookkeeping software
- Know your needs: Recognize key features and tasks for common use cases.
- Review your budget; consider monthly, quarterly, or annual more significant payments.
- Assess extra functions. Evaluate unnecessary capabilities
- Best Online Bookkeeping Software Options
QuickBooks Online ($8/month)
Scan receipts, 24/7 support, Square & Shopify & PayPal integration.
FreshBooks ($15/month)
Single dashboard to manage everything: mobile app, backup, integrations with business apps
Zoho Books ($9/month)
Friendly dashboard, pay online, balance sheets, and support like a boss.
GoDaddy Bookkeeping (Price: $4.99/month)
Frugal, directly synced with a bank account, AZ, Etsy, easy invoicing.
Zipbooks (free, $15/month)
Invoice emailing, auto-billing payment reminders, and competitive info
Bookkeeping software that is both cost-effective and user-friendly for any business livelihood. Select software that fits your requirements and budget and gives you the features you need.
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