Written by the OneBooks Team
Finding bookkeeping services for your business is a critical responsibility, as it involves the management of your financials. Any errors committed in this area could become expensive problems further down the line and could cause your business to falter altogether. This is why it’s critical to consider your bookkeeping needs with care and ensure that you’ve properly prioritized this task. Some business owners might decide to take on such a responsibility to save money; however, this can be even more costly in the future due to the increased risk of errors.
The Most Common Bookkeeping Mistakes Small Business Owners Make
1. Throwing Out the Receipts for Low-Cost Transactions
If you ever get audited, failing to have all your receipts will prevent you from proving that the deductions you claimed were legitimate. This is why it’s critical to keep every receipt. Bookkeepers often have the tools to keep your receipts organized and allow you to be free of unnecessary clutter.
2. Not Tracking All Your Reimbursable Expenses
In a similar vein, it’s important to keep track of every reimbursable expense, as this will help you make the most of your limited budget by giving you access to tax deductions. Keeping all your costs organized into set categories can be extremely helpful to achieving this.
3. Failing to Manage Your Petty Cash
Petty cash is a helpful resource when covering small expenses, but if you aren’t careful about who has access to it and don’t keep updated records, you expose your business to potential theft or costly errors.
4. Improper Deductions of the Sales Tax
Sales tax can be a complicated matter, especially when considering the various laws and regulations that affect it. Failing to do this correctly could put your business at risk of incurring tax liabilities.
5. Misclassifying Your Employees
Depending on your previous line of work, you might have only seen one or two types of employees, but there are several. Whether you’re working with freelancers, consultants, or some other class of employees, correctly identifying them is key to determining who is legally considered staff and how that impacts your taxes.
6. Failing to Properly Balance the Books
At the end of the day, even the more careful, attentive work can have errors. This is why it’s necessary to compare your bookkeeping records to your bank statements regularly. This allows you to take note of any potential discrepancies and address them as needed.
7. Tackling Bookkeeping All on Your Own
There are already plenty of pressing responsibilities on your plate as the owner of a small business. Attempting to add bookkeeping to that list puts you at serious risk of encountering the errors described above. By putting a dedicated bookkeeper on the task, you give yourself the time to take on work that is more relevant to your position. That being said, when hiring a bookkeeper, make them a part of your team, not an outside party you never speak to. The key to a successful relationship with your bookkeeper is communication. This way, there are no surprises or misunderstandings when it comes to your financial records.
Avoid These Common Problems By Hiring an Outside Bookkeeper
Attempting to handle your bookkeeping all on your own could lead to a large number of errors. Besides, trying to prevent all of those potential mistakes can be extremely time-intensive, keeping you from other important tasks. Hiring an outside bookkeeper can make a huge difference in helping you build a solid foundation for your business.