As a new business owner, you’re more than likely focused on sales and growth than you are with the laborious task of bookkeeping. But if not done properly, you can end up causing yourself a lot of stress. You have enough of that running your business...Here are seven common bookkeeping mistakes that new business owners make and how you can avoid them!
#1: Having Unorganized Records.
Maintaining records is time–consuming and tedious, however, it is incredibly important. Trust me, the shoebox or desk drawer won’t work. Why? Keeping organized, up-to-date sets of records and receipts helps you keep track of key business expenses.
It also helps keep a record of potential (and very valuable) tax deductions. Additionally, if you are audited by the IRS, they will require you to provide proper bookkeeping documentation to resolve the audit.
#2 Not Categorizing Your Income and Expenses.
All income and expenses must be tracked in specific categories to help understand your company’s true profitability month–to–month and year–to–year. This may also help reduce your tax liability.
#3 Failing to Properly Report Sales Tax.
Tons of small businesses fail to account for sales tax – a huge and costly mistake. Make a point to understand your sales tax requirements which will depend on the types of products and services you sell and where you conduct business.
You must consider the city, state, and federal taxes (where applicable). Paying taxes is your responsibility, and if you fail to do so, you could end up incurring hefty penalties.
#4 Not Tracking Reimbursable Expenses.
It is very common for new business owners to use money from personal accounts to cover initial expenses. However, it is critical to set up a tracking system for all reimbursable expenses so they can be used as tax write-offs.
#5 Not Maintaining Separate Bank Accounts.
It is imperative to set up separate accounts for personal and business finances. The financial activities of both should have a solid barrier to cut down on potential errors.
Also, if the IRS audits your business, you want a clear divide of what is a business expense versus a personal expense.
#6 Failing to Protect Your Data.
Today’s digital world provides many conveniences, however, by no means is it fail-proof. It is critical to back up and secure your company’s financial data.
Fortunately, there are plenty of affordable cloud-based solutions that will help keep your bookkeeping records and other important files safe. Make sure they encrypt the data that’s stored to protect your information!
#7 Making Mistakes When Entering Data.
With bookkeeping and financial records, it’s best to be careful. Always triple check your numbers to ensure they were entered in the proper accounts and expenses categories.
Entering one wrong zero at the end of a dollar amount could lead to multiple miscalculations down the line.
Need Bookkeeping Help?
Are you a new business owner struggling to properly maintain your bookkeeping records? Don’t wait; set your growing business up for success.
At Bookkeeping Geeks in Tampa, FL, our specialty is helping small-to-medium–sized businesses save time and money (and sanity!) with bookkeeping services. We help with accounts payable, budgeting, financial reports, payroll, receivables, and more. Call us today at (813) 515-0216!