Bookkeeping is the cornerstone of all successful businesses, no matter how large or small the business. Even though it is important, bookkeeping isn’t all that fun and many business owners make huge mistakes in the process that might cost them. Don’t worry though, you aren’t alone. There are actually three extremely common bookkeeping mistakes that might be costing you big. The good news is, however, that they are mistakes that are fairly easily rectified, and proper bookkeeping can keep your business chugging along!
- Not Keeping Receipts under $75
Sure, if you are running your household budget, your morning cup of coffee from the local coffee house doesn’t make a difference, but every expense counts when it comes to small businesses. Although the IRS doesn’t require these receipts as proof at tax time, chucking them and acting like they didn’t happen isn’t really a good idea either. These small receipts can help you keep track of your out-of-pocket expenses and can make it much easier to see the bigger financial picture. Scanning these receipts and keeping them filed away on your computer won’t take up any room, but they may come in very handy down the road.
- Forgetting to Deduct Sales Tax
No one wants to pay sales tax and if you fail to deduct sales tax from your books on retail sales, you are inflating your actual sales total. Sales totals are important during tax filings, but they are also important in the day-to-day bookkeeping for your business. A higher sales amount will do very little for you in deductions on your taxes, and it will artificially inflate how much your business thinks it is making. Both things are bad news for your bottom line and your pocket, and they can also lead to big mistakes in your books.
- Failing to Reconcile the Books with your Bank Statement
The electronic age has been a wonderful thing for banking; it has streamlined many processes and made checking your business or personal balances a breeze, but many businesses are relying a little too heavily on either their books or their bank statements and when those two don’t match, problems can arise. Even bigger problems come up when you notice a problem but you haven’t been reconciling the books each month. At that point, you are searching for a needle in a haystack. To make things easier, do remember to reconcile your books with your bank statement each month. This will ensure everything falls in line each month and you don’t miss a big problem simply because you didn’t cross reference your finances. You should do it for your personal finances, too.