Common Bookkeeping Mistakes Made By Business Owners

As a business owner, it is inevitable that you will make a few mistakes along the way. Every business owner needs to learn from their experience to improve their systems and knowledge as the business grows. But, you can save yourself some of the headache by learning from common mistakes made by other business owners. Here are a few things that you should avoid:

1. Cutting Corners to Save Money

It is good to be cost-sensitive, but you need to make sure that you are avoiding a situation where you cut corners to save a few bucks. When it comes to bookkeeping services and accounting software, the old saying “you get what you pay for” is very applicable. Make your decision based on the features and services that are available, instead of only deciding based on price alone.

2. Avoiding Audits and Reconciliation

Monthly reconciliation are tasks designed to monitor the cash flow within your business, and these items can save you from bigger problems later on. Some business owners skip these tasks because they don’t want the headache of monitoring the books. Make sure that your business is conducting monthly reconciliation and audits to prevent fraud and cash flow issues.

3. Filing Your Own Taxes

Unless you are a certified accountant and you have extensive experience with tax preparation and filing, it is best to let a professional handle it for you. A bookkeeping service can help you stay on track with financial tracking throughout the year, and then an accountant can offer assistance with the tax filing. You will be able to maximize tax deductions and write offs, and minimize IRS penalties.

4. Mixing Business and Personal Spending

When starting a small business, many people start out by using the same bank account. It can be a big mistake to mix the spending. One of your top priorities should be opening a business bank account to keep your spending separate. Make sure to keep detailed records and receipts to track all of your spending, because you can’t deduct the expenses without a record of the transaction.

5. Mixing Up Contractors and Employees

There are distinct differences between employees and contractors, and you need to make sure that you are handling your team in the right way. Tax burdens and responsibilities change depending on whether you are working with a contractor or an employee, and you should talk with a financial expert to make sure that you are structuring payments and taxes appropriately.

If you want to avoid these common bookkeeping mistakes, then one of the best things that you can do is to hire an outsourced bookkeeper. Here at Easier Bookkeeping, we offer high quality outsourced bookkeeping services for small businesses. Contact us for more information: (888) 620-0770

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