You may have been doing your own business bookkeeping for many years, or maybe you are just starting a new business venture. Have a browse through these top 4 common bookkeeping mistakes and see if you recognise anything that you have been doing in your business.
1. Combining personal and business finance.
Don’t get too caught up in the early stages of starting a new business to overlook this one – it’s an important one! Even for sole traders, not separating your finances can cause serious headaches. Get a separate bank account organised and ensure all business income goes in here from day one.
2. Not reconciling bank accounts
Reconciling your business bank accounts is really one of the basic fundamentals of good business bookkeeping. Where I work it is done daily – that way any data entry errors are picked up whilst everything is easy to recollect. You may only need to do it weekly or monthly. Viewing your bank statements on a regular basis will also help keep you in tune with your cashflow situation. Simply put, reconciling means that your bank statement matches your business books. Bank account fees and interest get entered into your books and unpresented cheques can be followed up. Many accounting software packages can be set up for automated bank feeds – doing much of the work for you.
3. Not keeping receipts
Get into the habit of keeping every business related receipt – claim every expense you are entitled to and ensure you have proof of purchase if you are ever audited. Good organisation and filing will help with this one. Place a spike on employee desks for credit card and fuel receipts. Get employees into the routine of emptying their work vehicles of any parking tickets. Promptly file away paid bills. If you are not sure whether you can claim the expense, keep the receipt anyway and ask your accountant at tax time. Easy!
4. Getting behind with the books
Small business owners often have to juggle many roles and bookkeeping will sometimes have to go on the back-burner. If you are at the point where you cannot keep on top of your bookkeeping, consider hiring a professional freelance bookkeeper or part-time bookkeeper. It is important that at any time you can look at your books and establish the financial health of your business – whether you are making a profit, whether your customers are paying within terms, what you owe etc. If hiring a bookkeeper isn’t an option, get into the routine of doing a little of the bookkeeping often.