Previously, there were many issues that small business owners handled that would mean a lot of drama for their business in case of any mistake. Book keeping, accounting and several other business dimensions have been done manually until recently. The welcoming of a large range of accounting applications that we witness today was good news to small business owners.
With the selection of accounting applications available in the market, small business owners can easily and reliably keep an accurate track of where the business money is going. Besides the many benefits that these accounting software has brought, we have also witnessed a couple of bookkeeping errors and accounting mistakes that are costly to the business.
Some of these mistakes and accounting errors includes wrongly categorizing a transaction and using the wrong accounting formulas. Some of them are insignificant while others can exceedingly affect the business in terms of loses and errors in setting new company decisions.
To help you get through with small business bookkeeping, we are going to talk about some of the many accounting errors, guide you on how each of them is created, propose a solution, and eventually give you some tips that can greatly help you with small Business Bookkeeping.
Taking bookkeeping lightly
One big mistake that most business owners make is not taking bookkeeping serious enough. As we all know, the key to an effective bookkeeping and a profitable business is recording any transaction. You have to make sure small and big transactions are recorded the right way. Unfortunately, most business owners don’t take book keeping so serious. This issue is definitely brought about by ignoring some things including assets, liabilities, and checking the books every single month.
If you have to keep your business financially stable, you should start by taking book keeping very serious. Regardless of how small your business is, implement some reliable accounting software that can help you record every transaction.
Confusing employees with contractors
Some businesses never specify employees and the contractors. You need to be different by categorizing all the people that contribute in one way or the in your business operations. Are these permanent or contractors? Just remember there’s a very big difference between the two groups.
Managing the accounts in-house
To most business owners especially those that own extremely small businesses, it’s highly tempting to run all your bookkeeping and accounting in-house. Doing all this in-house and doing it on your own can save you money but remember you have to invest a lot of time and money along the way. There are also many errors that you are likely to make.
Tips for better small Business Bookkeeping
- Hire a pro-The first thing to do is to make sure you have a professional bookkeeper for your business.
- Do a quarterly review-You should review your accounting books quarterly looking for trends including the decline of sales and growth of sales.
- Use time tracking software-It’s also a good thing to monitor your employee’s time through time tracking software.
- Observe the tax declines-This will help you avoid getting caught short.
- Keenly observe the accounts receivable-Take a close eye on your customers that are not paying on time because this can fasten the drying process of your business’s cash flow.